Case No. QBCMI 1999/1033/A3
BAILII Citation Number: [1999] EWCA Civ 3040
IN THE SUPREME COURT OF JUDICATURE
IN THE COURT OF APPEAL (CIVIL DIVISION)
ON APPEAL FROM THE QUEEN'S BENCH COMMERCIAL COURT
(HIS HONOUR JUDGE HALLGARTEN)
Royal Courts of Justice
Strand
London WC2

Date: Wednesday 15th December 1999

B e f o r e:

LORD JUSTICE EVANS
LORD JUSTICE HENRY
LORD JUSTICE WALLER

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BETWEEN:
(1) OCEAN CHEMICAL TRANSPORT INC
(2) OCEAN SHIPS INC
Claimants/Appellants
AND:
EXNOR CRAGGS LIMITED
Defendant/Respondent

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(Computer Aided Transcript of the Stenograph Notes of
Smith Bernal Reporting Limited, 180 Fleet Street,
London EC4A 2HD
Tel: 0171 421 4040
Official Shorthand Writers to the Court)

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MR G CHARKHAM (Instructed by More Fisher Brown, 1 Norton Folgate, London E1) appeared on behalf of the Appellant

MR M DAVEY (Instructed by Andrew M Jackson & Co, Essex House, Manor Street, Hull) appeared on behalf of the Respondent
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J U D G M E N T

1.	LORD JUSTICE EVANS:  This is an appeal from a judgment given by His Honour Judge Hallgarten QC in the Commercial Court on 26th July 1999. He decided three preliminary issues, which had been ordered to be tried by Rix J on 6th November 1998.
2.	The issue as ordered was “whether or not the claim is time barred as alleged in paragraph 10 of the amended points of defence served 21st April 1998”. As the learned judge indicated, the issue gave rise to three sub-issues, which he defined as follows:
“1.If the time-bar was incorporated in the contract of sale, does it serve to extinguish any liability which the defendants may otherwise owe?
2.Was the time-bar in fact incorporated into the contract of sale? 
3.If the time-bar would serve to extinguish liability, and was incorporated, was the contract of sale subject to the Unfair Contract Terms Act 1977 (‘UCTA’), whereby the claimants are precluded from relying on such time-bar?”
3.	The three issues all arose out of paragraph 10 of the defence, which alleged: 
“In any event, the Plaintiff’s claims are time-barred as follows: 
(i)[as amended] The Defendants’ General Terms and Conditions were incorporated into the contract or, in the alternative, the Agreement.
(ii)Section 10 of such Terms and Conditions provided inter alia as follows: 
‘. . . All liability whatsoever on [the defendants’] part shall cease unless suit is brought within six months after a delivery of the goods. . . ‘ 
(iii) The goods (scil The Fuels) were
delivered on or about the 22nd February 1995.
(iv)The action herein was commenced on 25th July 1996. 
In reliance on the aforesaid Section 10, the Defendants deny liability.”
4.	The contract was for the supply of bunkers, the claimants being a United States company which owned or operated a number of ships. They arranged for bunker liftings through a United States brokerage company, Bunkerfuels Corporation of Cranbury, New Jersey. In the present case the sale was broked by the United Kingdom company, Bunkerfuels UK Ltd. The person concerned at Bunkerfuels UK was a Mr Jack Varela. He arranged a purchase from the respondent, Exnor Craggs Ltd, who were represented by Mr Mark Paul. The respondents are an English company which is based in Grimsby.
5.	The bunkers were supplied to a vessel, the Julius Hammer, at Suez on 22nd February 1995. On 24th March 1995 the appellants paid the respondents for them. Pursuant to the contractual terms, title in the fuel passed to the appellants then if not before. 
6.	It was not until July 1996 (that is to say, some seventeen months later) that the claimants’ vessel was arrested in Egypt by the company which had supplied the bunkers. That was a company called Societe Cooperative des Petroles. When the vessel was arrested by those suppliers, it was apparently because the suppliers were claiming that they had not been paid for the bunkers in question by whoever had placed the order with them.
7.	Little is known about the exact basis of the suppliers’ claim. The points of claim read as follows:
“9The Supplier has commenced legal proceedings in Egypt against the Vessel and/or her Owners and/or Disponent Owners and/or Managing Owners and/or Master and/or Charterers alleging that it has not received payment as aforesaid. . . “
8.	The reference to “as aforesaid” is a little unclear. There is no allegation in the pleading of any contract between the suppliers and any other party.
9.	The vessel was released from arrest upon payment of a substantial sum by way of security bond for US$227,528.38 and it is that which forms the basis of the damages claim which the appellants now bring against the respondents from whom they contracted to buy the bunkers in question.
10.	The claim is that the arrest came about because of a breach of contract by the respondents. The claimants rely upon the statutory implied terms in section 12 of the Sale of Goods Act 1979. Section 12(1) contains the term to the effect that the seller has a right to sell the goods. That may be sufficiently called the undertaking as to title. In section 12(2) there is specified a further implied term:
“(b)the buyer will enjoy quiet possession of the goods except so far as it may be disturbed by the owner or other person entitled to the benefit of any charge or encumbrance so disclosed or known.”
11.	Section 12(2)(a) provides for a further term to the effect that the goods were free from a charge or encumbrance at the time when the property passed.
12.	The claimants allege breaches of both those terms. The allegations necessarily are in general terms because of the paucity of information regarding the precise nature of the proceedings which have been brought in Egypt. Broadly, however, Mr Charkham submits that there are grounds for alleging at least two breaches of contract. First, that there was some defect in the title to the goods which has resulted in the later arrest of the ship. The significance of that alleged breach is that it occurred, if at all, at the time when the bunkers were delivered in February 1995. Secondly, there was, he says, a breach of the term as to quiet enjoyment (that is section 12(2)(b)), the importance of that allegation being that the breach occurred only in July 1996 when the vessel was arrested. For that reason counsel has emphasised the alleged breach of the provision as to quiet possession rather than the further allegation of a breach of the term as to title.
13.	It must be observed that the basis of the claim made in Egypt is not at all clear. The likelihood would seem to be that the bunkers in question were consumed by the vessel long before July 1996. There may well be room for considerable debate as to whether any residues of those bunkers remained in the vessel in July 1996. It may also be observed that any such debate would seem, on the face of it, to be highly artificial and likely to be unproductive. However, we must assume for present purposes that a ground or grounds for claiming damages from the defendants by reason of the subsequent arrest of the vessel may be made out.
14.	The circumstances in which the contract was made were set out by the learned judge at pages 10-12 of his judgment. This account and these findings are not challenged by Mr Charkham on this appeal and they can therefore be accepted as follows:
“In consequence Mr Earnest Janssen of BUSA [the United States brokers] telephoned Mr Varela instructing him that BUK were to place the stem with the defendants. Mr Varela accordingly telephoned his counterparty at the defendants, Mr Mark Paul, and, agreement having been reached between them, Mr Varela sent the following to the defendants at 17.04 on 7th February 1995 addressed to ‘Buyer and Seller’:
‘In accordance with instructions received from Ocean Ships Inc we confirm placing following nomination.’
Certain details were set out and the fax continued:
‘The above details are the basis of the contract between buyer and seller which is governed by sellers terms and conditions of sale. Bunkerfuels UK Ltd is acting as brokers only.’
About half an hour later, at 17.34 Mr Paul sent to BUK a fax in slightly different terms which it is common ground contained or evidenced the contract. That fax identified the purchaser in somewhat wider terms, amplified the details, eg as to payment terms, and concluded:
‘This nomination has been placed in accordance with our general terms and conditions of sale and delivery (copy available upon request).’
This fax was copied by BUK to BUSA but it is not clear whether BUSA passed it to the second claimants. They did, however, provide what might be called a resume which included the following provision:
‘The terms and conditions of this sale, unless otherwise stipulated, are subject to the seller’s general terms and conditions. Particular attention should be given to clauses concerning cancellation (which generally require a force majeure situation) and the price validity period. If the buyer is not in possession of same and wishes a copy, a written notice must be sent to Bunkerfuels Corporation, by facsimile or telex, within 24 hours of the date and time this confirmation is sent.’
The resume concluded:
We will assume that all parties agree to this confirmation unless we are notified in writing within 24 hours of the date and time that this message is sent.’
There is not evidence that the fax was sent otherwise than to the claimants.
The above narrative is sufficient to show that the contract purported to incorporate the defendants’ general terms and conditions.”
15.	The terms and conditions in question are included in the bundles before us in two forms. The first is printed on a total of seven pages. It was in that form that the terms had, some time prior to the making of the contract, been supplied by the respondents to the United Kingdom brokers. We also have them in another form where they appear on four pages, each bearing two columns in rather smaller print.
16.	The relevant term is the last, section 10, which is headed “Disputes” and which I should read in full:
“The agreement entered into with the Buyer shall be governed by the laws of the United Kingdom. The applicability of the Uniform Sales Act is expressly excluded. All disputes arising or resulting from or touching our agreement with the Buyer shall be referred exclusively to the determination of the competent Court at London, unless we should decide to apply to another Court or we should submit to the determination and judgment of such other court of law. All liability whatsoever on our part shall cease unless suit is brought within six months after delivery of the goods or the date when the goods should have been delivered.”
17.	Perusal of the earlier terms, sections 1-9, show that there was detailed provision for the incidents of a contract such as this. There are, in particular, stringent time limits for what are described generally as matters relating to “measurements, quantity and quality” in section 3. It would seem that these reflect the nature of a contract such as this. In short, disputes as to quantity or quality have to be determined within a very short time after delivery. Clause 3/10 requires immediate notice and formal notice of claim within ten days after delivery. There are further provisions regarding the passing of ownership, in particular in section 5.6 and section 7. Those are directly relevant, of course, to the assertion that there was a breach of the term as to title in the present case.
18.	Mr Charkham’s submission with regard to the layout of the general terms and conditions is that no prominence whatever is given to what is for present purposes the relevant sentence; that is, the six-month time bar contained in the very last sentence of the last clause, which is section 10. Factually, that submission is entirely correct. We have not been troubled with consideration of the details of any of the other clauses. Mr Charkham submits that in so far as there are stringent requirements and time limits, for example with regard to quantity and quality, those are matters which the buyer of bunkers in circumstances such as this would naturally expect to find. Therefore, he submits, no prominence need be given to them. It is otherwise, he submits, when there is a general time limit of the kind which is relied on in the present case. There was evidence that the terms in question had been in use by the respondents from about the mid 1980s. 
19.	The evidence before the judge included that of Mr Paul. Paragraph 11 of his witness statement reads:
“The reason why the 6 months time bar was implemented in Section 10 of the terms and conditions is as follows. Claims usually relate to quantity or quality of the fuel supplied, or non‑payment of the price. The terms and conditions give a detailed procedure should there be a dispute as to quantity and quality. It is usually apparent from the outset, when supply takes place if there has been a short delivery. Disputes as to quality are usually discovered within a matter of days when the vessel starts to use the fuel. It is for this reason that, pursuant to Section 3.10 we require notification within 10 days of any claim. This is a more than reasonable period to allow a party because, as I have said, disputes are usually apparent by this stage. The terms and conditions ensure that we retain samples taken at delivery for a period of up to 2 months. I understand that some suppliers may keep samples for up to a period of 6 months but generally no longer. This is considered more than sufficient as a dispute on quality is usually apparent by that stage. Usually Exnor Craggs Ltd give credit of 30 days. This is the industry norm. I have known instances of credit periods being granted of 45 days and, rarely, 60 days but this is the maximum. Therefore, 6 months usually gives ample time for a potential dispute to have crystallised.”
20.	Much evidence was placed before the judge on what was essentially a construction issue and the learned judge made a number of findings. He did so in the context of the second issue, that is to say under the heading “Incorporation”. He had been referred to a great number of other forms used by suppliers of bunkers and had even heard expert evidence, presumably as to the practices in this particular trade. Among the issues which he decided, as I shall indicate shortly, were the questions whether the clause and its terms should properly be regarded as either onerous or unusual. 
21.	He made some detailed findings at page 18 of his judgment as to the general picture which was created as a result of what he called “a diligent trawl of no fewer than 60 different standard terms of sale proffered by bunker suppliers or dealers”. He stated his conclusions under four headings. They included paragraph 4:
“In about a third of forms (say about 20) there were limitations along the lines set out under sub-head 3 above [that is to say time limits] in relation to any claim. As to notice provisions, these varied from one to 45 days; as to the time to start proceedings the periods varied from one month to one year. Of to these provisions the vast majority were not the mutual clauses (cf the Himmerland [that was a judgment reported at [1965] 2 Lloyds Rep 353, to which he had referred earlier]  but operated only in favour of the sellers.”
22.	Those findings are criticised by Mr Charkham in his submissions on this appeal.
23.	The learned judge decided all three issues in favour of  the respondents. His conclusions were stated as follows. First, with regard to construction, which he described as the “pure construction argument” he held that there was no reason put forward for derogating from the plain meaning of the clause.
“By contrast . . . Mr Davey [counsel for the respondents] was able to advance and extol the benefits of certainty and finality. Upon expiry of six months the defendants would know where they were and would, if they wished, be able to treat any transaction as history. True, there might be claims which only surfaced after the expiry of six months, but a period of six months is not itself an unreasonable period of limitation, either in the context of commercial transactions generally or bunker transactions in particular”.
24.	He went on to say that there was no requirement to give the clause a strained construction so as to reallocate risk in circumstances which would only arise, as he said “with relative rarity” ‑ that is to say, when the claim surfaces as late as this one did. In support of his conclusions on construction, he referred to the judgments of the House of Lords in The Evje [1974] 2 Lloyds Rep page 57 and The Himmerland, to which I have already referred. The latter judgment was concerned, of course, with the well-known Centrocom clause which frequently appears or appeared in charter parties with well-known short time limits within which proceedings have to be commenced.
25.	Secondly, with regard to the incorporation issue, the learned judge made the findings of fact which I have already quoted and he later referred to the extrinsic evidence, which he summarised. He explained that it was not disputed but that the terms and conditions were incorporated as a document. The contention was that: 
“. . . if . . . the-time bar would serve to defeat the claim in this case, it was solely that provision of the terms and conditions which was not incorporated.”
26.	He then recited Mr Charkham’s reliance upon the principle of construction which is exemplified in the following authorities in particular ‑ Thornton v Shoe Lane Parking [1971] 2 QB 163, Interfoto Pictures Library Ltd v Stiletto Visual Programmes Ltd [1989] 1 QB 433, AEG (UK) Ltd v Logic Resource Ltd [1996] CLC 265 and Laceys Footwear (Wholesale) Ltd v Bowler International Freight Ltd [1997] 2 Lloyds Rep 369. That principle is summarised in the 28th edition of Chitty on Contracts in paragraph 12/015 as follows:
“Onerous or unusual termsAlthough the party receiving the document knows it contains conditions, if the particular condition relied on is one which is a particularly onerous or unusual term, or is one which involves the abrogation of a right given by statute, the party tendering the document must show that it has been brought anything fairly and reasonably to the other’s attention. ‘Some clauses which I have seen,’ said Denning LJ, ‘would need to be printed in red ink on the face of the document with a red hand pointing to it before the notice could be held to be sufficient.’”
27.	The learned judge held, first, that that principle had no application in the present case where, unlike the cited authorities, there was an express reference to the terms and conditions in question in the contractual documents themselves. Moreover, it was a reference first made by the brokers who, on any view, were acting, whether exclusively or not, as agents for the buyers. Secondly, however, he proceeded to consider whether, if that was wrong, the present clause, clause 10, should be regarded as either onerous or unusual for the purposes of this rule of construction. He found, partly on the evidence before him and partly, clearly, from his own knowledge of these matters, that neither adjective could properly be applied to a clause such as this. He concluded:
“In those circumstances, even had I held that in this case the right approach to the question of incorporation was that set out in the Interfoto case, I would still have concluded that the defendants were entitled to invoke the time-bar.”
28.	Thirdly and finally, with regard to the third sub-issue, the judge recorded that it was not in dispute that if the Unfair Contract Terms Act applied in the present case, then the effect of section 6(1) would be to override clause 10 in relation to claims arising under section 12 of the Sale of Goods Act. The issue before him arose under section 26 of the Unfair Contract Terms Act, which reads as follows:
“26. International supply contracts. 
(1)The limits imposed by this Act on the extent to which a person may exclude or restrict liability by reference to a contract term do not apply to liability arising under such a contract as is described in sub-section (3) below . . . 
(3)Subject to sub‑section (4), that description of contract is one whose characteristics are the following - 
(a)either it is a contract of sale of goods or it is one under or in pursuance of which the possession or ownership of goods passes; and 
(b)it is made by parties whose places of business (or, if they have none, habitual residences) are in the territories of different States...”
29.	As Mr Charkham pointed out, those two requirements of an exceptional case are cumulative. There are further requirements in sub‑section (4) which are disjunctive but which are not relevant in the present case.
30.	The learned judge rejected submissions that the present case was within the wording of section 26(3)(b). The submission was that the reference to the words “it is made by parties whose places of business are in the territories of different states” was satisfied here because the contract was in fact made in London by the  brokers and therefore the fact that the sellers and the buyers had their places of business in the territories of different states (that is to say, the United States of America and the United Kingdom) was not material. The learned judge rejected that argument and held:
“. . . although UCTA is not altogether clear and suffers from shifts of language, it seems to me that ‘party’ means ‘party to the contract’, ie someone who accepts liability as a principal. Its meaning is in my view reinforced by section 27(2)(b) which touches on contracts concluded by an agent - albeit what that subsection deals with are contracts with a party who is a consumer.”
31.	Then the learned judge held that the relevant place of business for the party in question was the true place of business of that party, and not the place of business of the agents through whom the contract happened to be made. 
32.	Mr Charkham, to whose submissions I would pay tribute for their care and for the clarity with which they were presented to us, both in writing and orally, has submitted, first, that the learned judge was in error in failing to concentrate upon the alleged breach of the quiet possession term in section 12(1)(b) of the 1979 Act. He says that that was important because the essence of that allegation of breach is that the breach did not occur and therefore no claim could be made in respect of it until after the six-month period had expired. By eliding the allegation of a breach of that term with the more general allegation of a breach of the term as to title, in Mr Charkham’s submission, the learned judge diminished the importance of that factor. 
33.	He submitted, secondly, that the central feature of the present case is that the relevant claim arose after the six months’ period had expired. It follows that if clause 10 has the effect for which the respondents contend, then that claim effectively is still-born because no proceedings can be taken in respect of it.
34.	Mr Charkham submitted, thirdly, that the learned judge’s summary of the evidence with regard to other forms of terms and conditions was not accurate. He said in particular that very many of them were governed by foreign laws. There was no evidence before the judge as to what those foreign laws were. There was in any event considerable scope for argument as to what was the effect of the individual clauses in particular forms.
35.	He submitted, fourthly, that the learned judge was wrong to consider the type of clause (that is to say, its general characteristic as a clause which seeks to prevent claims being brought after a specified period) when deciding whether sufficient notice of the existence of the clause was given to the other party, rather than the effect of the particular clause and specifically in the circumstances of this case. He emphasised, in relation to incorporation, that the clause in the present case has first, as he submits, the nature of a particularly onerous or unusual term, and secondly, that its effect is to abrogate the buyer’s statutory rights given by section 12 of the Sale of Goods Act.
36.	These submissions therefore overlap the construction arguments, where Mr Charkham submits that the clause has such unjust and unfair consequences in the circumstances of the present case (where the clause effectively prevents any claim being brought, because it could not be brought within the six-month period) as being sufficient ground for denying such a wide interpretation of the clause in this case.
37.	These submissions of Mr Charkham were developed in the skeleton argument and he has taken us through the different steps of his submission which he says lead to that conclusion. He submits, first, that the clause should properly be regarded as an exceptions clause, not merely a limitation clause, relying on the speech of Lord Sumner in Atlantic Shipping and Trading Co Ltd v Louis Dreyfus & Co [1922] 2 AC 250 at 261. He submitted that the judgment of Rix J in BHP Petroleum Ltd v British Steel Plc [1999] 2 Lloyds Rep 583, if it is to a contrary effect, at pages 589‑590, is wrong, but he also referred us to the citations by Rix J from the House of Lords’ judgments in Ailsa Craig v Malvern [1983] 1 Lloyds Rep 183. 
38.	For my part, I am content to accept for present purposes that the proper approach to construing this clause is that which is adopted when an exceptions or exclusion clause is under consideration. That has been said to be a more stringent approach than when the clause merely seeks to limit the amount which may be recovered. I would add just this:  it seems likely to me that the authorities are consistent with each other. The proper approach to interpretation would take account both of the kind of clause it is and the nature and extent of any rights which it purports to take away from the opposing party or to modify. However that may be, I am content to adopt the more stringent approach which has been referred to in relation to exceptions clauses.
39.	Mr Charkham submits that the respondent’s construction flouts business common sense and he adopts the familiar authorities to the effect that a construction which leads to an wholly unreasonable result is likely to be rejected by the courts in a commercial contract such as this. Mr Charkham’s submission does not, in my view, take sufficient account of the factor which was referred to by the learned judge; that is to say, the advantages for the seller and possibly for the buyer also if a line is drawn under a contract such as this after a certain, not unreasonably short, period has passed.
40.	On the wording of the clause Mr Charkham submitted, first, that the reference to “bringing a suit” in clause 10 must imply that it was possible to bring a suit - which, of course, could not be done in relation to the alleged breach of the term to quiet possession until after the six-month period had expired. The words “all liability whatsoever shall cease” implied, he submitted, that there was a liability in existence prior to the cessation provided for at the end of the six-month period. Therefore, he said, on those narrow pedantic grounds, as well as the more general considerations, the clause should not be construed so as to defeat the present claims.
41.	With regard to incorporation, Mr Charkham referred us to the authorities which were also referred to by the judge; in particular, to the fact that in the Interfoto case, different reasons for reaching the same conclusion were given by Dillon LJ on the one hand and by Bingham LJ on the other hand. The former concluded that the clause was not incorporated in the contract; the latter that, although incorporated, the clause should not be given effect to in the circumstances of the case. Where the two judgments are at one is in upholding the approach which is summarised in the passage from Chitty which I have already read.
42.	With regard to the judgments in the AEG case, Mr Charkham showed us that the majority held that, in applying the test of incorporation as set out in Chitty, it was appropriate to consider what may be called, for short, the construction and effect of the particular clause. That appears specifically at page 273D in the judgment of Hirst LJ. On the other hand, Hobhouse LJ, who dissented, held that the proper approach was to consider what kind of clause was in issue, and then to decide whether sufficient steps had been taken to bring the existence of that kind of clause to the notice of the other party and also to decide whether the particular clause was onerous or unusual by reference to the kind of clause that it was. It was wrong, he said, to apply that test to the specific terms of the clause in question. As he pointed out at page 277B and following, that was a case where difficulties arose because the clauses, which were not of an unusual kind, were unreasonably drafted. He thought that to concentrate upon the precise meaning of the particular clause in question meant that: 
“. . . one is completely distorting the contractual relationship between the parties and the ordinary mechanisms of making contracts. It will introduce uncertainty into the law of contract.”
43.	Mr Charkham emphasised that diversity of view because in the present case the learned judge referred to the judgment of Hobhouse LJ with approval and it was that which had led him, Mr Charkham submitted, to consider not so much the effect of this particular clause as simply the kind of clause which it was. 
44.	This summary has not done justice to Mr Charkham’s submissions, but I hope to have covered the main points which he has raised in support of his contentions, first, that the clause should bear a narrower construction than that for which the respondents contend; and, secondly, that insufficient was done by the respondents to bring this clause to the attention of the buyers in this particular case. As regards the third issue, with regard to the Unfair Contract Terms Act, Mr Charkham repeated the submissions which he made to the judge.
45.	My conclusions are as follows. I will deal with the issues in reverse order. In my view the learned judge was entirely right to reject the submissions with regard to the application of the Unfair Contract Terms Act. It seems to me as clear as could be that the reference in section 26(3)(b) to a contract which is “made by the parties”, and then refers to the places of business of the parties, is referring to the principals to the contract in question and not to the agents through whom the contract may have been made. The reference to section 27(2)(b), where the statute draws a distinction between the parties on the one hand and others who may make the contract on his behalf on the other hand, seems to me to underline the fact that the reference to “parties” in section 26(3)(b) is to the principals and not to their agents. It is unnecessary and superfluous to say that there are other reasons which would make Mr Charkham’s suggested construction, it seems to me, wholly impractical. The question whether the contract was within the Act or not would depend not upon the place of business of the parties to the contract, but to the possibly wholly coincidental location of the places of business of the agents through whom the contract was made. The place of business of the parties would be likely to be referred to in a written contract; the place of business of the agents might well not be.
46.	Insofar as Mr Charkham suggested that there were general considerations as to the likely reasons for making the exemption which is found in section 26, it seemed it me that those submissions fell at the first hurdle. The exemption is a limited one in respect of a particular kind of contract, namely contracts for the sale of goods only, and any such explanation would have to take account of that fact also, as Mr Charkham’s does not. Therefore I would uphold the judge’s order as regards issue number 3.
47.	I for my part would take issues 2 and 1 together. They are, of course, separate issues but they do overlap. The fact that they overlap is perhaps emphasised by the divergence of opinion in, first, the Interfoto case and secondly in AEG. In the former case, Interfoto, the two Lords Justices reached the same result but on the two different bases to which I have referred. It seems to me that the question of incorporation must always depend upon the meaning and effect of the clause in question. It may be that the type of clause is relevant. It may mean that the effect of the particular clause in the particular case is relevant. That, of course, was the division of opinion in the AEG case. But whichever it is, applying that test in the present case, the first stage is to ask what type of clause clause 10 is. It is a clause which has the effect of a time bar clause which excludes liability after a certain period has passed. Mr Charkham does not submit, as I understand it, that that type of clause could properly be regarded as either onerous or even unusual in a contract of this kind. But, assuming in his favour that it is necessary to apply the majority test in AEG, then the question arises whether this clause, which provides a six-month time limit, can justify either of those adjectives. Then the preliminary question, which was decided by the learned judge as his first ground of decision, was that the authorities are of doubtful application in a case such as the present where there was an express acknowledgement in the contractual documents that the terms and conditions in question were incorporated.
48.	Mr Charkham submits that the Interfoto test, as he called it, has to be applied, even in a case where the other party has signed an acknowledgement of the terms and conditions and their incorporation. It seems to me that Mr Charkham could be right in what might be regarded as an extreme case, where a signature was obtained under pressure of time or other circumstances, and where it was possible to satisfy the Interfoto test; that is to say, that the clause was one which was particularly onerous or unusual for incorporation in the contract in question. I would prefer to put the matter more broadly and to say that the question is whether the defendants have discharged the duty which lies upon them of bringing the existence of the clause upon which they rely (and, if Mr Charkham is right, of the effect of that particular clause)  to the notice of the other party in the circumstances of the particular case. 
49.	As I have indicated, in some extreme circumstances, even a signature might not be enough. On the other hand, in the present case there was an express acknowledgement. It seems to me that, given the nature of this term and condition and its effect, as relied upon by the respondents, it cannot be said that the respondents failed in their duty to bring the existence of that term to the notice of the buyers, through, of course, their agents, to whom the term had been long available for their perusal. Mr Charkham does not hesitate to submit that the clause in question should have had, as he puts it, the red hand approach. I would doubt very much whether that is practical in the context of a commercial contract such as this. In my view, the respondents did, in this particular case, where there was an express acknowledgement of the existence of the terms, certainly discharge their duty of bringing it sufficiently to the notice of the buyers for the clause to form part of the contract. That makes it unnecessary to make any explicit findings, as the learned judge did, as to whether this clause was properly to be regarded as onerous or unusual; but, as I have already indicated, I have taken account of the effect of this clause in reaching the conclusion which I have already stated. It seems to me that there is in fact no evidence which supports the proposition that this clause is in any way extreme or totally unexpected to be found in a contract such as this.
50.	Finally, therefore, I come to the question of construction. The most formidable argument, undoubtedly, is that the clause on the respondents’ construction prevents the claimants from bringing a suit which could not be brought during the six-month period, simply because the breach occurred after that period ended. On the evidence that we have seen, this situation is certainly highly unusual and may even be unprecedented. It may be that Mr Charkham regards that as an argument in his favour, but it seems to me that it is not. It does not lead to an inference that the parties would have given the clause a more limited meaning if they had contemplated this unusual situation arising some time in the future. It seems to me rather that the evidence shows that the risk of circumstances such as this arising was so small that one can accept that they were almost certainly not present to the minds of the parties, nor would they have been to the minds of persons placed as the parties were. It seems to me to follow from that that, if the matter had been raised, the risk would have been recognised as minuscule (to use a word which I suggested in argument). In those circumstances, even had the possibility been raised, the parties could well have agreed that the clause should remain as it was; in other words, that the buyers should accept that minuscule risk rather than seek to renegotiate the contract. In effect, the buyers would not be aware of any significant commercial disadvantage to themselves by agreeing at that stage to accept this small risk, if there was thought to be any real risk. That is perhaps another way of saying that I do not see any grounds in the present case for supposing that the parties intended that clause to have less than its clear effect. The effect is clear and, in my judgment, the learned judge was right to find as he did on issues 1 and 2. 
51.	I would dismiss the appeal accordingly. 
52.	LORD JUSTICE HENRY: I agree. 
53.	LORD JUSTICE WALLER: I also agree.
ORDER:  The appeal is dismissed with costs here and below. Detailed assessment of the respondent’s costs of the appeal. Permission to appeal to the House of Lords refused.
(Order not part of approved judgment)