Biomass Heating Solutions Ltd v Geurts International BV (Approved)

Factual and Procedural Background

The Plaintiff, an Irish agri-tech biomass fuel company based in County Limerick, brought proceedings against the Defendant, a Dutch company based in Leiden, alleging breaches of multiple contracts concerning the supply of heat exchangers for use in poultry farm biomass energy systems known as "BHSL Units." The heat exchangers were designed and manufactured by the Defendant and integrated into the Plaintiff's systems for converting untreated poultry manure into energy.

The Plaintiff claimed defects in the supplied heat exchangers caused significant operational problems in certain BHSL Units installed at poultry farms in the United Kingdom, resulting in quantified losses of €3,657,147 and reputational damage. The Defendant denied these allegations and contended that its general terms and conditions, which limited liability and imposed a twelve-month limitation period for claims, governed the contracts. The Defendant further argued that the Plaintiff's claims were time-barred under these terms. The Defendant counterclaimed for unpaid invoices totaling €967,238.91.

Procedurally, the proceedings were initially listed for a unitary trial but were ordered by Quinn J. to proceed on a modular basis, with the first module focusing on the contractual terms governing the parties' relationship, including the applicability of the Defendant's terms and conditions and the governing law. The parties agreed that Irish law principles would apply to the determination of issues concerning contract formation and terms incorporation, except for the question of whether Dutch law disapplies any terms.

Legal Issues Presented

1. Are any of the individual contracts between the parties subject to the Defendant's general terms and conditions?
2. If the Defendant's terms and conditions govern any contracts, do the exclusion of liability and limitation clauses apply?
3. Are any of the contracts governed by the Plaintiff's terms and conditions as set out in its long form purchase order terms?
4. If neither party's terms and conditions apply, what terms govern those contracts?
5. If the Defendant's terms and conditions apply, are any of those terms disapplied under Dutch law?

Arguments of the Parties

Plaintiff's Arguments

• The Defendant's general terms and conditions were not effectively incorporated into the contracts, particularly due to the significant lapse of time between the alleged provision of those terms at a March 2010 meeting and the contracts entered into years later.
• References to the Defendant's terms and conditions in correspondence and footers are insufficient to incorporate onerous or unusual limitation clauses without actual supply or clear notice of such terms.
• The March 2010 meeting was an introductory meeting without contractual effect; thus, terms allegedly supplied then cannot govern contracts formed later.
• The Defendant's letters describing quotations do not constitute offers to sell; the Plaintiff's purchase orders were the offers, and the Defendant's subsequent confirmations were counter-offers.
• The Plaintiff's own detailed purchase orders, especially from 2016 onwards, set out terms which governed the contracts where the Defendant did not expressly reject or negotiate these terms.

Defendant's Arguments

• The Defendant contends that its general terms and conditions, including liability limitations and a twelve-month limitation period, govern the contracts between the parties.
• The terms and conditions were provided at the March 2010 meeting via a folder left on the Plaintiff's desk, constituting sufficient notice for incorporation.
• The letters from the Defendant, even if described as quotations, were intended as offers or at least invitations to treat, with subsequent correspondence and conduct evidencing contract formation on the Defendant's terms.
• The Defendant argues that references to its terms and conditions on multiple documents suffice to incorporate them, especially given the international trade context and alleged similarity to widely accepted industry terms (such as ORGALIME).
• The Defendant maintains that Dutch law principles would uphold the limitation clauses unless there was gross negligence or intentional wrongdoing, and that such clauses are generally enforceable in commercial contracts.

Table of Precedents Cited

Precedent	Rule or Principle Cited For	Application by the Court
James Elliott Construction Ltd v. Irish Asphalt Ltd [2014] IESC 74	Determination of when terms and conditions are incorporated into contracts; requirement that reference be made in contractual documents of a nature expected to contain contractual conditions.	Applied to assess whether references to Defendant's terms and conditions in correspondence and order confirmations sufficed for incorporation; found insufficient in this case.
Noreside Construction Ltd v. Irish Asphalt Ltd [2015] 1 ILRM 229	Requirement of reasonable notice for incorporation of onerous or unusual terms; actual supply or identification of terms necessary unless they are well-known industry terms.	Key authority guiding the court’s conclusion that Defendant's bespoke terms were not incorporated without actual supply or clear identification.
Boyers & Co. v. Duke [1905] 2 I.R. 617	Quotations generally are invitations to treat, not offers; detailed context and language determine contractual effect.	Used to distinguish quotations from offers in analyzing Defendant’s letters; supported finding that Defendant's letters were quotations, not offers.
Dooley v. Egan (1938) 72 ILTR 155	Quotations may constitute offers if language and context indicate intention to be bound upon acceptance.	Considered in evaluating Defendant’s letter of 5th November 2015; found that language used was consistent with a quotation rather than an offer.
Parker v. South Eastern Railway Company (1876-77) L.R. 2 C.P.D. 416	Terms and conditions must be made available or identified at the time of contracting to be incorporated.	Applied to reject Defendant’s argument that terms left in 2010 meeting were incorporated into contracts years later without further notice.
Leo Laboratories Ltd v. Crompton BV [2005] 2 I.R. 225	Under EU law (Brussels Regulation), a party can be bound by terms it ought to have been aware of in international trade.	Distinguished by the court as EU law context not applicable to Irish contract law issues here.
British Road Services Ltd v. Arthur V. Crutchley & Co. Ltd [1968] 1 All E.R. 881	Incorporation of known industry terms by reference and conduct in course of dealings.	Referenced in relation to industry-wide terms; Defendant’s bespoke terms not held to be of this nature.
Circle Freight International Ltd v. Medeast Gulf Exports [1988] 2 Lloyd's Rep. 427	Clear and legible reference to terms available on request can suffice for incorporation if terms are known and usual.	Considered in relation to Defendant’s references to terms available on request; found insufficient here due to bespoke nature of terms.
Kunders/Swinkels (Supreme Court of the Netherlands, 18 June 2004)	Under Dutch law, exemption clauses may be disapplied if unreasonable or unfair, especially if damage is due to intent or gross negligence.	Referenced in considering whether Defendant’s limitation clauses would be upheld under Dutch law; ultimate conclusion deferred pending trial.
Bart's Retail (Supreme Court of the Netherlands, 29 January 2021)	Courts must consider all circumstances before disapplying exemption clauses; limitations generally upheld absent gross negligence.	Applied in context of Dutch law analysis; court deferred final determination on applicability of limitation clauses.

Court's Reasoning and Analysis

The court undertook a detailed examination of the contractual communications and the surrounding factual matrix to determine the contractual relationships and the applicability of the Defendant’s general terms and conditions. It applied established Irish contract law principles, particularly those relating to the "battle of the forms," offer and acceptance, and incorporation of terms.

The court found that the Defendant’s alleged provision of its terms and conditions at the March 2010 meeting, by leaving a folder containing those terms on the Plaintiff’s desk without discussion or explicit reference, was insufficient to incorporate those terms into contracts entered into years later. The significant lapse of time and absence of any reminder or reference at the time of contracting undermined incorporation.

In respect of individual contracts, the court analysed the sequence of documents exchanged. For example, in the contract concerning BHSL Unit 14, the Defendant’s letter of 5th November 2015 was held to be a quotation rather than an offer, with the Plaintiff’s purchase order constituting the offer. The Defendant’s subsequent letter of 12th November 2015 was a counter-offer containing materially different terms, including a limitation of liability clause. The Plaintiff’s acceptance of delivery without objection was treated as acceptance of this counter-offer, forming the contract on those terms.

However, the court concluded that the references to the Defendant’s general terms and conditions in the correspondence and order confirmations were insufficient to incorporate those terms into the contracts. This was because the Defendant’s terms were bespoke, not well-known industry terms, and were not supplied or brought to the Plaintiff’s attention in a manner sufficient to satisfy the high threshold for incorporation of onerous terms. The court relied heavily on the Supreme Court decisions in Noreside Construction Ltd and James Elliott Construction Ltd, which require actual supply or clear identification of terms unless they are well-known industry terms.

For contracts where the Plaintiff issued detailed purchase orders specifying terms, and the Defendant responded with order confirmations containing only generic references to its terms and conditions in small print footers, the court found that the Defendant had not clearly rejected the Plaintiff’s terms. In such cases, the court held that the Plaintiff’s terms governed the contract.

Regarding the applicability of Dutch law and whether Dutch courts would disapply onerous exemption clauses, the court acknowledged that this issue was contingent on the contracts being governed by the Defendant’s terms and conditions, which it found they were not. Nonetheless, it considered Dutch law principles, noting that Dutch courts apply a strict test for disapplying exemption clauses, generally upholding limitation clauses in commercial contracts unless gross negligence or intentional misconduct is shown. The court deferred any definitive ruling on this issue until the main trial, when factual matters would be fully explored.

Holding and Implications

The court held that the Defendant's general terms and conditions do not apply to any of the contracts in issue between the parties.

As a result, the contracts are governed either by the express terms set out in the relevant correspondence and purchase orders or, where applicable, by the Plaintiff’s own terms and conditions. The Defendant’s attempts to rely on limitation of liability clauses and other restrictive terms in its general terms and conditions were rejected due to insufficient incorporation and lack of adequate notice.

The court also deferred any determination on the application of Dutch law to the limitation clauses until the main trial, given the factual complexities involved.

This decision directly affects the parties by clarifying that the Defendant cannot rely on its bespoke general terms and conditions to limit liability or dismiss claims as time-barred. However, no new legal precedent beyond the application of existing Irish contract law principles was established.

The court directed the parties to liaise on costs and other issues arising from this judgment and scheduled a further mention and directions hearing, including fixing a trial date.