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Effect of printing arbitration clause on Printed invoice

Effect of printing arbitration clause on Printed invoice

From a printed invoice, it cannot be inferred that the parties were ad idem on the existence of an arbitration agreement. In Taipack limited V. Ram Kishore Nagar Mal[1], an award was passed by an arbitrator, on the basis of an arbitration agreement printed on the reverse of the invoices raised by the respondent. The petitioner challenged the validity of the arbitration clause. The Delhi High Court held that there is no arbitration agreement that could be said to be contained in a document signed by the parties. For the existence of an agreement, there has to be consensus ad idem on the material terms of the contract, between the parties, that they should agree to the same thing in the same sense. A mere printing of a condition on the reverse of the invoice was at the highest and offer made by the respondent to the petitioner. Unless the said offer is accepted by the other party, it cannot result in a binding and enforceable contract. The inclusion of terms and conditions at the back of the invoice, unilaterally issued by the respondents while effecting delivery of goods in terms of purchase order would not bind the petitioner.

Up printed note at the lower portion of the supply invoice which read: ‘This sale is subject to the sale, dispute and arbitration rule of Mumbai piece goods merchants Mahajan’ was held not to be a valid agreement to refer the dispute to arbitration, in the absence of any provision in the contract for arbitration in Vidya Hari Shankar Laxman Ram V. Pratap Ray Hari Shankar[2]

It is usually, particularly in building contracts, the reference is made to the certain standard specifications, which includes or excludes the arbitration clause. In K Sasidharan V. Kerala State film development Corporation[3]the parties to the contract specifically excluded the arbitration clause in Madras details standard specifications. In this situation, it was held that there was no incorporation of the arbitration clause in the contract. If the parties had chosen not to incorporate the arbitration clause of the standard specifications, the court cannot impose the clause on the parties by an interpretive process.

In Alimenta SA V. National Agriculture Co-op Marketing Federation of India Ltd[4], the Supreme Court held that an arbitration clause of an earlier contract can be incorporated by reference into a later contract, provided it is not inconsistent with the terms of the contract in which it is Incorporated.

In elite engineering and construction (Hyderabad) Private Limited V. Textron construction India Private Limited[5]and EPC contractor had executed and construction agreement with the respondent. The respondent floated a tender for sub-contracting its work, and the tender was awarded to the appellant. Clause 45 of the EPC contract between the EPC contractor and the respondent provided for arbitration. The appellant contended that this clause would stand incorporated the subcontract because the sub contract provided for terms and condition of the EPC contract to be applicable to it. The court rejected this common contention, held that the arbitration agreement contained in the EPC contract would not stand incorporated in the subcontract since only specific terms had been incorporated in the subcontract.[6]

This Article Does Not Intend To Hurt The Sentiments Of Any Individual Community, Sect, Or Religion Etcetera. This Article Is Based Purely On The Authors Personal Views And Opinions In The Exercise Of The Fundamental Right Guaranteed Under Article 19(1)(A) And Other Related Laws Being Force In India, For The Time Being.

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BY : Mr. kartikeya Awasthi

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