Whether the terms of trade incorporated by reference in sales contract via web-link is binding on the parties?

OPEN COUNTRY DAIRY LTD v ABLE FOOD SDN BHD
[CIVIL APPEAL NO: W-02(IM)(NCC)-1793-11-2020]

• Able Food Sdn Bhd (“Respondent”), a company incorporated in Malaysia, purchased instant whole milk powder from Open Country Dairy Ltd (“Appellant”), a company incorporated in New Zealand.

• Both parties entered into a sales contract between November 2016 and September 2017 (“Sales Contract”).

• In each of the Sales Contract, it contained a web-link at the bottom which the Appellant referred to as the “Terms of Trade”.

• During one batch of delivery of milk powder, the Respondent became aware that a substantial part of the delivery was defective. Hence, the Respondent filed a suit at the High Court in Malaysia for breach of contract in supplying milk powder that was of unmerchantable quality.

• The Respondent claimed that they duly served the notice of writ on the Appellant in New Zealand, however the Appellant alleged that the notice of writ was not regularly served as it was inconsistent with s. 388 of New Zealand’s Companies Act 1993.

• The Appellant then filed an application to set aside the Respondent’s notice of writ arguing that the courts in Malaysia should not assume jurisdiction over the dispute as parties had submitted to the exclusive jurisdiction of the courts in New Zealand.

• The Appellant contended that in the terms of trade incorporated by reference in each of the Sales Contract via the web-link, the parties agreed that the forum for any dispute was in New Zealand.

• The High Court dismissed the application on the grounds that the terms of trade were not applicable as there was no consensus on the terms of trade since the ‘modified terms were not attached to the Sales Contract. Hence, the present appeal.

• The Court of Appeal held that the terms of trade are to be found in the web-link and formed part of the contract for the purchase of the instant whole milk powder.

• The fact that the Respondent did not click on or look up the web-link did not negate the terms of trade which are contained in the web-link.

• The Respondent’s failure to click and read the terms in the web-link was akin to a contracting party not bothering to read and understand the terms of a contract they enter into.

• The Court of Appeal also held that the Respondent was not obliged to furnish the Appellant with a copy of the terms of trade as the document was just a “click away” on the web-link.

• Therefore, the Respondent was bound by the terms of trade as it was already incorporated by reference via the web-link as provided in each Sales Contract that was signed by the Respondent.