Interfoto Picture Library Ltd v Stiletto Visual Programmes Ltd [1987]

Interfoto Picture Library Ltd v Stiletto Visual Programmes Ltd [1987] is an English contract law case that deals with onerous clauses and the common law rule requiring reasonable notice for them to be effective. The case also touches on the concept of onerous clauses as disguised penalties, though the court did not make a definitive decision on this point.

Interfoto delivered 47 photographic transparencies to Stiletto in a jiffy bag, along with standard terms and conditions inside the bag. The terms included a holding fee of £5 per transparency for each day over fourteen days. Stiletto, without opening the transparency bag or reading the terms, did not use the transparencies for its planned presentation. After about a month, Interfoto sent a bill for £3,783.50.

The Court of Appeal held that the holding fee was ineffective due to lack of reasonable notice. Dillon LJ emphasised that a term, especially if particularly onerous or unusual, must be brought to the party's special notice. While the holding fee was deemed invalid, Interfoto was entitled to a small restitutory charge of £3.50 per transparency per week for their holding.

Bingham LJ, concurring with the decision, stated that the clause was not valid due to its unreasonably stringent nature. He emphasised the importance of fairness and advocated for embracing good faith in contractual dealings. Bingham LJ did not make a definitive ruling on whether the clause could be challenged as a disguised penalty, as this point was not argued before the court.

In his remarks on penalty clauses, Bingham LJ expressed reluctance in assuming the enforceability of the clause if fully and fairly brought to the defendant's attention. The court did not decide this issue, as it was not raised in the arguments.

This case is significant for its reaffirmation of the common law principle that onerous clauses require reasonable notice to be effective. The case underscores the importance of fairness in contractual dealings and suggests a willingness to consider good faith principles. Additionally, while the court did not conclusively decide the issue, the case raises questions about the enforceability of onerous clauses when they might be deemed disguised penalties, especially if not fully and fairly brought to the other party's attention.
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