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Contract terms means English company must apply Indian law

Posted: 9th August 2011   In: Corporate Commercial

Companies entering into contracts with businesses abroad need to take care over the small print if they want any future disputes to be settled under UK law.

Failure to do so could prove costly, as one UK company recently discovered.

The company entered into an agreement with an Indian supplier to provide it with condoms to be sold in the UK.

It was part of the company’s standard terms and conditions that disputes with foreign partners should be settled under English law. It drew up a purchase order, which it thought included those standard terms and conditions, and proceeded with the contract on that basis.

However, the Indian supplier never saw the full purchase order; it only saw the purchase order number.

This led to difficulties when a dispute arose later and the English company sought an injunction ordering the Indian supplier to provide the condoms as agreed.

The Court in England held that the dispute would have to be settled under Indian law. It held that the Indian supplier could not possibly have subscribed to the English company’s terms and conditions as it had not seen them.

It followed therefore that those terms could not have been incorporated into the contract.

Please contact us if you would like more information about the issues raised in this article or any aspect of contract law.