A recent decision from the Supreme Court of New South Wales is a timely warning for consumers and businesses of the importance in reading terms and conditions before they are signed.

Michael Hill Jeweller (Australia) Pty Ltd (Michael Hill) has been ordered to pay AUD $2,259,971.40 (plus interest and costs) to its packaging supplier Gispac Pty Ltd (Gispac), for breaching the supplier’s terms and conditions.

In 2014, Michael Hill signed three new sale agreements with Gispac as part of an international rebrand. The sale agreements included a tick box that read “please tick to confirm you agree the terms and conditions that can be found at the following link…”.

Without reading the terms and conditions, Michael Hill physically signed the agreements and ticked the box. They had unknowingly agreed to be liable for any shortfall between the specified minimum order quantity and the actual number of bags ordered. They had also agreed to pay for any products ordered but not purchased, and that Gispac would be the exclusive supplier.

Gispac first issued a shortfall notice in 2017 for AUD $2.1M. Michael Hill disputed this and Gispac pursued Michael Hill for breach of contract. As part of their defence, Michael Hill claimed that the link to the terms and conditions was not working at the time the sale agreements were entered into. However, the court found no evidence of that. The terms and conditions were held to be valid and Michael Hill were bound by them.

Ticking a box is a small act, but this case demonstrates the huge consequences that can arise when the terms and conditions aren’t read. It is a none too subtle reminder that before entering into any contract, businesses and consumers should ensure that they fully understand the terms and conditions, including any terms that are incorporated into the agreement by reference.

This case also demonstrates the importance for businesses of having robust terms and conditions that apply to their provision of goods and services.

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If you have any questions about the terms and conditions you are agreeing to, please get in touch with our business team. Our business team are vastly experienced in preparing terms and conditions for your business.

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