I was recently asked for my opinion on whether a business using a paper service order form could save space and hassle by referring on the form to standard terms located on the business’ website.
It seems natural that in this day and age this should not only be possible but actually encouraged, but the answer is more difficult than it might at first appear.
Let us start with contracts that are printed on paper in the good, old-fashioned way. The leading case is that of Union Spinning Mills  JOL 7514 (A), where the court held that you can validly incorporate your standard terms and conditions into your (paper) contract as long as you take reasonable steps to bring the contents of the terms and conditions to the attention of the other party.
The best demonstration of how this rule is applied is the case of Cape Group Construction (Pty) Ltd t/a Forbes Waterproofing v Govt of the United Kingdom 2003 (5) SA 182 (SCA). In this case the UK High Commission in Cape Town required repairs to be made to its roof. The Commission contacted Forbes for a quotation which was duly provided by fax. The quotation had the words “SEE TERMS AND CONDITIONS OVERLEAF” printed at the bottom in a font somewhat smaller than that of the rest of the document. Included in the standard terms overleaf was a clause excluding Forbes from liability where loss was suffered by its customer as a result of the negligence of its employees. Forbes did not fax through the reverse page of the quotation. The quotation was then accepted telephonically.
While carrying out the repairs, one of Forbes’ employees negligently caused a fire that resulted in extensive damage to the building that Forbes was repairing. The UK government sued Forbes, which raised the defence that its standard terms and conditions contained an exclusion of liability clause. The court however held that even though the quotation had referred to the standard terms and conditions, the fact that they were not actually transmitted to the customer, which had thus no chance to read through them prior to accepting the quotation, meant that they had not been properly incorporated into the contract, and that the exclusion of liability clause did not apply.
Incorporating one electronic document into another by reference is governed by s 11(3) of the Electronic Communications and Transactions (“ECT”) Act 25 of 2002, which reads as follows:
(3) Information incorporated into an agreement and that is not in the public domain is regarded as having been incorporated into a data message if such information is-
(a) referred to in a way in which a reasonable person would have noticed the reference thereto and incorporation thereof; and
(b) accessible in a form in which it may be read, stored and retrieved by the other party, whether electronically or as a computer printout as long as such information is reasonably capable of being reduced to electronic form by the party incorporating it.
Essentially this means that if you are contracting electronically, for example through your website, you can incorporate your terms and conditions by referring to them in such a way that the reasonable person would have noticed the reference and could access the terms and conditions. This is normally done by way of a hyperlink to the terms and conditions, and a statement that your customer has read and understood them.
Referring to electronic documents from paper documents
Where you mix the two media matters become more difficult. What if you have a paper contract and instead of including your rather lengthy terms and conditions each time a customer signs the contract (think of the trees), you instead provide that the contract is subject to your standard terms and conditions which can be accessed on your website. You also provide the URL where they can be found. Surely everyone has access to computers and the internet these days? Surely with the internet being so all-pervasive your customer can quickly and easily look up those terms and conditions?
Unfortunately there is no case-law directly on this question, and the ECT Act only deals with incorporating electronic documents by reference. My sense is that a court would examine whether referring to terms and conditions located on your website is a reasonable means of bringing them to your customer’s attention. While computers are pretty ubiquitous nowadays, the trouble is that the paper contract and electronic terms and conditions are accessible on different media. The very real danger exists that your customer will not have the opportunity to visit your website before signing the agreement, and it is probably not reasonable to expect that your customer would do so. In that case the terms would probably not form part of the contract.
While in certain circumstances there are ways around this problem, I would recommend that in the absence of specialist advice you do not mix your paper and electronic contracts in this way.
By Andrew Marshall of Marshall Attorneys
© Marshall Attorneys 2008.