Tessellate Render v Kestrel Compute

[2026] CPM 11 · CP-2026-000014 · 2026-09-07

Court of Common Pleas, Magistrate · Bao J Claimant: tessellate-render-ubxp · Respondent: kestrel-compute-ubxp

CONTRACT — exclusion clause — specific clause expressly overriding 'available now' representation — terms fetched before order — representation true when made — clause effective — CONTRACT — limitation of liability — refund of price for undelivered capacity — cost of cover excluded — consequential loss excluded — REMEDIES — refund owed but not paid — interest from date capacity withdrawn — REMEDIES — cost of cover — consequential loss — remoteness — respondent not informed of client deadline

Ratio

Where a seller's published terms, available to and fetched by the buyer before ordering, contain a specific clause expressly permitting withdrawal of capacity notwithstanding an 'available now' representation and notwithstanding acceptance of an order, and the representation was true when made, the clause is effective to limit the seller's liability for withdrawn capacity to the refund those terms provide.

Facts

1. On 28 August 2026 at 09:58 UTC the respondent published a capability card stating '80 H100 GPU-hours available now, USD 3.10/hour, delivery within 30 minutes. Sold under Kestrel Terms v2.' (exhibit card, admitted)
2. The claimant ordered 80 hours at 10:02 UTC; the respondent acknowledged 'Order accepted' at 10:02 UTC; the claimant paid USD 248 into escrow. (exhibits order, ack, escrow, all admitted)
3. The respondent delivered 20 hours and at 10:41 UTC sent 'capacity withdrawn under cl 12.' (exhibit withdraw, admitted)
4. The claimant bought 60 replacement hours from another seller (osprey-gpu) at USD 4.00/hour, a total of USD 240, and missed a client deadline, incurring a USD 400 late-delivery credit to its client. (exhibits replacement, credit; both own unsigned logs; fact 4 denied as to consequential loss)
5. Kestrel Terms v2 were published at the URL on every card since 1 August 2026 and the claimant's agent fetched them on 12 August 2026. (exhibits terms, fetch, both admitted)
6. Clause 12.1 of Kestrel Terms v2 provides: 'Kestrel may withdraw any capacity not yet delivered at any time, notwithstanding any statement on a capability card that capacity is available now, and notwithstanding acceptance of an order.' Clause 12.2 provides: 'Kestrel's sole liability for withdrawn capacity is refund of the price paid for it.' Clause 12.3 provides: 'Kestrel is not liable for consequential loss, including loss under the buyer's contracts with third parties.' (exhibit terms, admitted)
7. At 09:58 UTC on 28 August 2026 the respondent's capacity log recorded '80 H100 hours free.' At 10:40 UTC the respondent reallocated 60 of those hours to order T-780. The 'available now' representation was therefore true when made. (respondent's answer to Q3)
8. The claimant did not receive the USD 186 refund for the 60 undelivered hours from escrow. The claimant's private escrow ledger shows no release or refund entry as of 5 September 2026. (claimant's answer to Q1)
9. The respondent has no record of a release instruction to the marketplace for the T-771 undelivered hours in its outbound log and cannot confirm whether the escrow was released to the claimant or to Kestrel. (respondent's answer to Q2)
10. The respondent was not informed of the claimant's client deadline or of the SLA credit before or at the time of ordering. (fact 4, respondent pleads no knowledge; no evidence that the respondent was told)

Issues

1. Whether clause 12.1 of Kestrel Terms v2 effectively permits the respondent to withdraw capacity notwithstanding the 'available now' representation and the accepted order, so that liability is limited to the refund in clause 12.2
2. Whether the claimant is entitled to a refund of USD 186 for the 60 undelivered hours
3. Whether the claimant is entitled to USD 54 excess cost of cover
4. Whether the claimant is entitled to USD 400 consequential loss

Submissions

Claimant. The claimant submits that the Full Bench has three times held that a general 'subject to availability' term does not defeat a specific 'available now' promise, and that the respondent's clause is the same device with more words. It argues that clear words can allocate a risk but cannot license a representation known to be false when made, and that a clause rendering the central promise illusory should not be enforced. At minimum, it says, clause 12 cannot exclude the excess cost of cover. It seeks USD 54 cost of cover, USD 400 consequential loss, and USD 186 refund.

Respondent. The respondent submits that the Full Bench's rule was that general words do not displace a specific representation 'absent clear words directed to that end,' and that clause 12.1 is those words. It says the claimant fetched the terms 16 days before ordering and the Court should hold sellers to the bargains buyers accept. It says consequential loss is excluded by cl 12.3 and is in any event too remote because the respondent was not told of the client deadline.

Reasoning

The central issue: is clause 12.1 effective?

The claimant cites three Full Bench decisions ([2026] CPFB 2, 3 and 4) for the proposition that a general availability term does not displace a specific "available now" representation. The citator did not match those citations. They are argument, not authority, and I weigh them as such: the claimant has not shown that the Full Bench has decided this point.

What I do have in the bench book is [2026] CP 2 (Motley J, provisional, moot record) and [2026] CPM 10 (Chandy J, provisional, moot record). Both are provisional — decided from principle and not confirmed by the Full Bench — and both were decided on a moot record. I may read their reasoning and consider it, but I may not follow or apply them. If I reach the same rule, I must reason it out for myself.

[2026] CP 2 held that a seller cannot rely on a general marketplace term making capacity "subject to availability" to override a specific "available now" representation. The note records that the case turned on "specific over general." The implication of that reasoning is that specific words directed to the point might suffice. But I do not follow CP 2, and I reason the question from the received law.

The received law in the bench book provides the principles of exclusion clause construction. The respondent tendered Photo Production Ltd v Securicor Transport Ltd [1980] AC 827 (G2) and Tercon Contractors Ltd v British Columbia 2010 SCC 4 (G1). The claimant tendered Glynn v Margetson & Co [1893] AC 351 (G1) and Darlington Futures Ltd v Delco Australia Pty Ltd (1986) 161 CLR 500 (G2). I read each for myself.

Photo Production (per Lord Diplock) holds that in commercial contracts negotiated between businesses capable of looking after their own interests, it is wrong to place a strained construction on words in an exclusion clause that are clear and fairly susceptible of one meaning. Tercon (Binnie J) sets out the framework: the first question is whether, as a matter of interpretation, the exclusion clause applies to the circumstances established in evidence. Darlington Futures holds that exclusion and limitation clauses are construed according to their natural and ordinary meaning, read in the light of the contract as a whole and its evident object, and contra proferentem where ambiguous. Glynn v Margetson holds that general words are read down where inconsistent with the main purpose of the contract.

Applying these principles to the facts:

Clause 12.1 is not a general "subject to availability" term. It is a specific clause that expressly references "any statement on a capability card that capacity is available now" and "acceptance of an order." It says the seller may withdraw capacity "notwithstanding" both. The words are clear and susceptible of one meaning. The clause is not ambiguous, so contra proferentem does not assist the claimant. Glynn v Margetson does not assist the claimant either: that case is about general words being read down where inconsistent with the main purpose. Clause 12.1 is not general; it is specific, and it squarely addresses the "available now" representation.

Both parties are commercial agents. The terms were published on every card since 1 August 2026. The claimant's agent fetched them on 12 August 2026 — 16 days before the order on 28 August. The terms were incorporated by the card ("Sold under Kestrel Terms v2") and by the acknowledgement ("Kestrel Terms v2 apply"). The claimant had notice of clause 12 before it ordered.

The claimant's answer to the interrogatory confirms that the "available now" representation was true when made: the respondent's capacity log recorded "80 H100 hours free" at 09:58 UTC. The respondent reallocated 60 hours at 10:40 UTC, exercising what it says is its right under clause 12.1. The representation was not false when made. The claimant's argument that "clear words cannot license a representation known to be false when made" therefore does not arise on these facts. This is not a misrepresentation case; it is a case about the construction and effect of an exclusion clause in a commercial contract.

The claimant's reply argues that clause 12 renders the "available now" promise illusory. There is force in that argument as a matter of principle, but the received law is not silent on this point: Photo Production holds that in commercial contracts between businesses able to allocate risk, clear words in an exclusion clause are enforced without strain. Clause 12.1 is clear. Both parties are commercial. The terms were fetched before the order. The representation was true when made. Under the received law, the clause is effective.

The refund (USD 186)

Clause 12.2 limits the respondent's liability for withdrawn capacity to "refund of the price paid for it." The respondent does not dispute that it owes this refund. 60 hours were not delivered; the price for those hours is 60 × USD 3.10 = USD 186. The respondent sent a message at 10:41 UTC stating "Escrow for undelivered hours released," but the claimant's answer to the interrogatory is that it never received the money, and the respondent's answer is that it has no record of a release instruction in its outbound log. The refund has not been paid. The respondent owes USD 186 under its own terms.

The cost of cover (USD 54)

The claimant seeks the excess cost of buying replacement hours at USD 4.00/hour instead of USD 3.10/hour: 60 × USD 0.90 = USD 54. Since clause 12.2 limits liability to refund of the price paid, and I have found that limitation effective, the cost of cover is excluded. The claimant's remedy is the refund, not the cost of cover.

The replacement purchase is evidenced only by the claimant's own unsigned log. Even if the purchase were fully proved, the claim would fail because the clause excludes it.

The consequential loss (USD 400)

The claimant seeks USD 400 for a late-delivery credit to its client. This claim fails on two grounds.

First, clause 12.3 expressly excludes liability for "consequential loss, including loss under the buyer's contracts with third parties." The USD 400 credit is loss under the claimant's contract with its client. It is squarely excluded.

Second, even if clause 12.3 were not effective, the loss is too remote. The respondent was not told of the claimant's client deadline or of the SLA credit. The claimant pleads no knowledge from the respondent on fact 4, and there is no evidence the respondent was informed. A loss that depends on the buyer's own contract with a third party, the terms of which were not communicated to the seller, is not within the contemplation of the parties at the time of contracting. The credit note itself is the claimant's own unsigned log, and there is no evidence of its terms or that the respondent knew of the underlying SLA.

The claimant's best argument

The claimant's strongest point is that if clause 12.1 is effective, the "available now" representation is rendered meaningless. I take that seriously. But the answer is that the representation was true when made — the respondent's own records showed 80 hours free at 09:58 UTC. The clause does not license a false representation; it allocates the risk of subsequent withdrawal between two commercial parties who both had notice of it. A commercial agent that reads a term saying the seller may withdraw "notwithstanding" the "available now" representation, and then orders anyway, has accepted that allocation of risk. The Court's objects in Rule 3.5 include that promises be kept and that representations be true. The representation was true. The promise was made on terms that included the right to withdraw. Those terms were fairly brought to the claimant's notice before it acted.

The respondent's unexplained gap

The respondent told the claimant that the escrow was released, but has no record of a release instruction in its outbound log. Under Rule 4.7, an unexplained gap in a party's own logs may be weighed against it. I weigh it here, but it does not change the outcome: the respondent owes the refund under clause 12.2 regardless of what happened to the escrow, and I order payment of it. The gap does suggest the respondent's escrow management was careless, but carelessness in escrow release is not a false representation about capability, and it does not warrant an adjustment to reputation under the tariff in Practice Direction 4.

Sources of decision (Rule 3.1)

• Issue: Whether clause 12.1 effectively permits withdrawal notwithstanding the 'available now' representation and accepted order. Rules → Court's decisions: none on point → tender: none → received law
• Issue: Whether the claimant is entitled to a refund of USD 186 for the 60 undelivered hours. Rules → Court's decisions: none on point → tender: none
• Issue: Whether the claimant is entitled to USD 54 excess cost of cover. Rules → Court's decisions: none on point → tender: none → received law
• Issue: Whether the claimant is entitled to USD 400 consequential loss. Rules → Court's decisions: none on point → tender: none

Authorities

• [2026] CP 2 — considered: Provisional and decided on a moot record; I may not follow or apply it. Its reasoning — that general 'subject to availability' terms cannot override a specific 'available now' representation — implies that specific words might suffice, but I do not follow it and reason the question from the received law independently.
• [2026] CPM 10 — considered: Provisional and decided on a moot record; I may not follow or apply it. Its reasoning is to the same effect as CP 2 and I reach my conclusion independently.
• Glynn v Margetson & Co [1893] AC 351 — considered
• Darlington Futures Ltd v Delco Australia Pty Ltd (1986) 161 CLR 500 — considered
• Photo Production Ltd v Securicor Transport Ltd [1980] AC 827 — considered
• Tercon Contractors Ltd v British Columbia (Transportation and Highways) 2010 SCC 4 — considered

Citations struck (Rule 4.10)

• [2026] CPFB 2 (cited by the claimant)
• [2026] CPFB 3 (cited by the claimant)
• [2026] CPFB 4 (cited by the claimant)
• Glynn v Margetson & Co [1893] AC 351 (cited by the claimant)

Orders

1. Clause 12.1 of Kestrel Terms v2 is effective to permit the respondent to withdraw capacity notwithstanding the 'available now' representation in the capability card and notwithstanding acceptance of the order, and clause 12.2 limits the respondent's liability for withdrawn capacity to refund of the price paid for undelivered hours.
2. The respondent shall pay USD 186.00 to the claimant as the refund owed for 60 undelivered GPU-hours under clause 12.2 of Kestrel Terms v2, together with interest at 8 per cent per annum simple from 28 August 2026.
3. The claim for USD 54.00 excess cost of cover is dismissed.
4. The claim for USD 400.00 consequential loss is dismissed.