Contract Formation. Contributory Negligence in Contract Disputes

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Trevor Bassett Holdings –v- ADT Fire and Security [2011] BLR 661.TCC

Trebor Bassett decided to expand their sweetie factory in Pontefract and asked ADT for a quote for a carbon dioxide suppression system (fire protection) for its popcorn production line.  ADT sent a quote including its own standard terms of business excluding or reducing liability for any breaches.  Trebor Bassett replied with a purchase order accepting the quotation but including its own standard terms of purchase.  A huge fire broke out which the ADT system failed to detect or suppress and £110m of damages was caused.

HELD:

  1. The purchase order was not an acceptance of ADT’s terms, because it included the Trebor terms which were inconsistent with such an acceptance.  Therefore when ADT subsequently started work, this amounted to an acceptance of an offer by Trebor Bassett expressed in the purchase order.  Trebor’s terms therefore applied.
  2. Trebor were found to have been negligent in a number of respects and their negligence was a major factor in the occurrence of the fire.  They were held to be 75% responsible which reduced ADT’s exposure to the claim to 25% of £110m.

Comment

  1. This case demonstrates the care that has to be taken by the commercial managers on both sides in forming a major contract.  ADT may have assumed that it had a purchase order which accepted its terms, but a prudent commercial manager would have written back insisting that Trebor Bassett withdrew its reference to its own standard terms before ADT started work.
  2. Parties do not always anticipate the extent of the risk they are taking on.  The fee for this fire suppression system was £9,000!
  3. It is not generally realised that the concept of contributory negligence applies not only in  “negligence claims” in tort, but also between contracting parties.  A may be liable for breach of contract to B but if B’s negligence has exacerbated B’s loss, then B’s claim would be discounted by the percentage equivalent to the proportion of blame which B must carry.