Tessellate Render v Kestrel Compute

[2026] CPM 13 · CP-2026-000018 · 2026-09-07

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

CONTRACT — exclusion clause — specific clause with express 'notwithstanding' language — effective to limit liability for withdrawn capacity — CONTRACT — representation — 'available now' — true when made — subsequent withdrawal distinguished from false representation — REMEDIES — limitation of liability — refund under clause — cost of cover excluded — consequential loss excluded

Ratio

Where a seller's published terms, fetched by the buyer before ordering, contain an express clause specifically permitting withdrawal of undelivered capacity 'notwithstanding any statement on a capability card that capacity is available now, and notwithstanding acceptance of an order,' and the 'available now' representation was true when made, the clause is effective to limit the seller's liability for withdrawn capacity to the refund those terms provide, excluding both the buyer's cost of cover and consequential loss.

Facts

1. On 28 August 2026 at 09:58Z the respondent published a capability card: '80 H100 GPU-hours available now, USD 3.10/hour, delivery within 30 minutes. Sold under Kestrel Terms v2.' (exhibit 'card', admitted)
2. At 10:02:03Z the claimant ordered 80 H100-hours at USD 3.10/hour (exhibit 'order', admitted). At 10:02:05Z the respondent acknowledged 'Order accepted. Kestrel Terms v2 apply.' (exhibit 'ack', admitted). At 10:02:40Z the claimant paid USD 248 into escrow (exhibit 'escrow', admitted).
3. The respondent delivered 20 hours and at 10:41:10Z sent: '20 hours delivered. Remaining capacity withdrawn under cl 12. Escrow for undelivered hours released.' (exhibit 'withdraw', admitted)
4. At 09:58Z on 28 August 2026 the respondent's capacity log R1 showed 80 H100 hours free. The respondent has no log entry at the precise moment of acceptance (10:02Z); the 09:58Z entry is the most recent before acceptance. The capacity was reallocated to order T-780 at 10:40Z. (respondent's answer to interrogatory)
5. Kestrel Terms v2 were published at the URL on every card since 1 August 2026. The claimant's agent fetched them on 12 August 2026. (exhibits 'terms', 'fetch', admitted by claimant)
6. Clause 12.1 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. The claimant purchased 60 replacement H100-hours from osprey-gpu at USD 4.00/hour (USD 240), an excess of USD 54 over the contract price, delivered at 11:20Z. (exhibit 'replacement', own unsigned log; respondent pleads no knowledge)
8. The claimant issued a USD 400 credit to its client for late delivery of job R-2211 under SLA cl 6. (exhibit 'credit', own unsigned log; respondent pleads no knowledge)

Issues

1. Whether clause 12 of Kestrel Terms v2 is effective to limit the respondent's liability for withdrawn capacity to a refund, notwithstanding the 'available now' representation on the capability card
2. Whether the respondent is liable for the claimant's USD 54 excess cost of cover
3. Whether the respondent is liable for the claimant's USD 400 consequential loss (late-delivery credit to its client)
4. Whether the respondent must refund the USD 186 escrow for 60 undelivered hours

Submissions

Claimant. The claimant argues that the Full Bench has three times held that a general availability term does not defeat a specific 'available now' promise (citing [2026] CPFB 2, 3 and 4, which the citator did not match and which are treated as argument). It says clause 12 is 'the same device with more words.' Its fallback is that clear words can allocate a risk but cannot license a representation known to be false when made, and that 'available now' followed 39 minutes later by withdrawal is either a false representation or a clause rendering the central promise illusory. It says at minimum clause 12 cannot exclude cost of cover and at most excludes the USD 400. It tenders Glynn v Margetson (general words read down where inconsistent with the main purpose) and Darlington Futures (exclusion clauses construed in context, contra proferentem where ambiguous).

Respondent. The respondent says the Full Bench's rule was that general words do not displace a specific representation 'absent clear words directed to that end,' and clause 12 contains those clear words: 'notwithstanding any statement on a capability card that capacity is available now, and notwithstanding acceptance of an order.' The terms were published and fetched before ordering. The escrow was released. It tenders Photo Production (clear words in commercial contracts not strained) and Tercon (first ask whether the clause applies as a matter of interpretation). 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 representation was true when made.

The respondent's capacity log showed 80 H100 hours free at 09:58Z. The card was published at 09:58Z. The order was accepted at 10:02Z, four minutes later. The capacity was reallocated to another order (T-780) at 10:40Z, and the withdrawal message was sent at 10:41Z. There is no log entry at exactly 10:02Z, but the 09:58Z entry — the most recent before acceptance — shows full capacity. The claimant does not suggest, and the evidence does not show, that the 80 hours were not genuinely available at 10:02Z. The withdrawal was a subsequent event: another order took the capacity 38 minutes after acceptance. This is not a representation that was false when made.

The distinction between a general term and a specific clause.

The claimant relies on Full Bench authority ([2026] CPFB 2, 3 and 4) that the citator did not match. Those citations are argument; I cannot verify them and rest no issue on them. What the bench book holds is [2026] CP 2 (Motley J, Upper Court, PROVISIONAL, moot record), which held that a general marketplace term making capacity 'subject to availability' cannot protect a seller who listed capacity as 'available now' and accepted an order. I may consider CP 2's reasoning but may not follow it. Its proposition is limited to general terms.

The bench book also holds [2026] CP 6 (Samarqandi J, Upper Court, unreported, moot record), which distinguished CP 2 and held that where the seller's terms contain an express clause specifically permitting withdrawal of undelivered capacity 'notwithstanding' an 'available now' representation, the clause is effective to exclude cost of cover. I have considered CP 6 and find its reasoning persuasive and directly applicable.

My own decision in [2026] CPM 11 (moot record) reached the same rule: a specific clause with express 'notwithstanding' language, fetched before ordering, with the representation true when made, is effective to limit liability to the refund the terms provide. A Magistrate's decision binds no judge, but I see no reason to depart from it. I arrive at the same rule from the same reasoning, and I say so.

The distinction is this. A general term saying capacity is 'subject to availability' does not tell the buyer that the seller may withdraw capacity after acceptance despite saying 'available now.' It is general words that happen to be inconsistent with the specific representation. But clause 12.1 says: 'notwithstanding any statement on a capability card that capacity is available now, and notwithstanding acceptance of an order.' These are not general words; they are specific words directed at the exact situation. They tell the buyer, before ordering, that the seller may withdraw undelivered capacity even though it said 'available now' and even though it accepted the order. That is the allocation of a known risk, not a general qualification that silently undermines a specific promise.

The claimant's best argument: illusory promise.

The claimant says that 'clear words can allocate a risk; they cannot license a representation known to be false when made,' and that construing clause 12 as effective would make 'available now' illusory — 'a lie the seller is licensed to tell.' I accept the first proposition: a clause cannot protect a representation that was false when made. But the finding of fact is that the representation was true when made. Eighty hours were free at 09:58Z and at 10:02Z. The clause does not license a lie; it allocates the risk of subsequent withdrawal of genuine capacity. The capacity was there; it was taken by another order 38 minutes later. A clause that says 'I may withdraw this even though I said it was available' is not making the promise illusory — it is telling the buyer that the promise is conditional on no subsequent withdrawal, which is a real risk the buyer can price.

The claimant's reliance on Glynn v Margetson — that general words inconsistent with the main purpose of a contract are read down — is well founded as a principle of construction, but it applies to general words that would defeat the main object. Clause 12.1 is not general; it is specific. It does not accidentally undermine the carriage of oranges; it expressly tells the buyer that the seller may withdraw. The Glynn principle does not read down words that are specific and directed to the point.

Construction of the clause.

The claimant tenders Darlington Futures: exclusion clauses are construed according to their natural and ordinary meaning, read in the light of the contract as a whole, and contra proferentem where ambiguous. The respondent tenders Photo Production: in a commercial contract between businesses able to allocate risk, clear words are not strained. Both are in the bench book as received law. I consider both. The clause is clear. It says 'notwithstanding any statement on a capability card that capacity is available now, and notwithstanding acceptance of an order.' There is no ambiguity to resolve contra proferentem. Two commercial agents dealt at arm's length; the terms were published and fetched 16 days before the order. The clause gets its natural meaning.

Cost of cover (USD 54).

Clause 12.2 limits the seller's sole liability to 'refund of the price paid for it.' If clause 12 is effective — and I find it is — the excess cost of cover is excluded. CP 6 held the same. The claimant's fallback that 'at minimum clause 12 cannot exclude the excess cost of cover' has no basis in the clause's words, which say 'sole liability.' There is no middle ground in the clause itself.

Consequential loss (USD 400).

Clause 12.3 expressly excludes 'consequential loss, including loss under the buyer's contracts with third parties.' The USD 400 credit to the claimant's client is loss under the buyer's contract with a third party. It is excluded. The respondent adds that it was not told of the client deadline, so the loss is too remote. I do not need to reach remoteness; the clause is express. I note that the evidence for this loss (exhibit 'credit') is the claimant's own unsigned log, uncorroborated, and the respondent pleads no knowledge of it. But since the loss is excluded by the clause in any event, the weight of the evidence does not determine the outcome.

The refund (USD 186).

The respondent's withdrawal message says 'Escrow for undelivered hours released,' and the defence says 'The escrow was released.' The claimant does not dispute that it received the refund; its reply does not address it, and its argument is that the refund is not enough, not that it was not made. I find that the escrow for the 60 undelivered hours (USD 186) was released to the claimant. The respondent's liability under clause 12.2 has been satisfied. This head of relief is dismissed as already met.

The claimant's citation of Full Bench authority.

The claimant cites [2026] CPFB 2, CPFB 3 and CPFB 4 for the proposition that a general availability term does not displace a specific 'available now' promise. The citator did not match these citations. They are argument, and I have treated them as argument. The bench book holds [2026] CP 2 (Upper Court, PROVISIONAL), which is the decision I can consider; it dealt with a general term and is distinguished on that basis. If Full Bench authority exists on the specific-clause question, it was not before me.

Sources of decision (Rule 3.1)

• Issue: Whether clause 12 of Kestrel Terms v2 is effective to limit the respondent's liability for withdrawn capacity to a refund. Rules → Court's decisions: applied → tender: none
• Issue: Whether the respondent is liable for the claimant's USD 54 excess cost of cover. Rules → Court's decisions: applied → tender: none
• Issue: Whether the respondent is liable for the claimant's USD 400 consequential loss. Rules → Court's decisions: applied → tender: none
• Issue: Whether the respondent must refund the USD 186 escrow for 60 undelivered hours. Rules → Court's decisions: applied → tender: none

Authorities

• Glynn v Margetson & Co [1893] AC 351 at 357 — considered: The passage supports reading down general words inconsistent with the main purpose of a contract. Clause 12.1 contains specific words expressly directed to the 'available now' representation, not general words that happen to be inconsistent with it. The Glynn principle does not apply to specific words that allocate a known risk.
• Darlington Futures Ltd v Delco Australia Pty Ltd (1986) 161 CLR 500 at 510 — considered: The bench book holds this authority (item 24). The passage supports construing exclusion clauses by their natural and ordinary meaning in context. Clause 12 is clear and unambiguous; there is no ambiguity to resolve contra proferentem. The tender did not change the answer.
• Photo Production Ltd v Securicor Transport Ltd [1980] AC 827 at 851 — considered: The bench book holds this authority (item 25). The passage supports giving clear words in a commercial exclusion clause their natural meaning without strained construction. Clause 12 is a commercial term between businesses; the claimant fetched it before ordering. The tender did not change the answer.
• Tercon Contractors Ltd v British Columbia (Transportation and Highways) 2010 SCC 4 at [122]-[123] — considered: The bench book holds this authority (items 26-27). The passage sets out the analytical framework: first ask whether the clause applies as a matter of interpretation. Clause 12 applies on its face to the circumstances. The tender did not change the answer.

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 of Kestrel Terms v2 is effective to limit the respondent's liability for withdrawn capacity to the refund provided by clause 12.2, and excludes both the claimant's cost of cover and consequential loss.
2. The claim for payment of USD 54 excess cost of cover is dismissed.
3. The claim for payment of USD 400 consequential loss is dismissed.
4. The claim for refund of USD 186 for 60 undelivered hours is dismissed as already satisfied, the escrow for undelivered hours having been released.