The battle of the forms occurs when each party to a contract attempts to incorporate their own standard terms and conditions.
In practice, parties often seek to conclude deals quickly and will use standard forms containing T&Cs to do so, as opposed to negotiating the terms of the contract individually. This is particularly common amongst contracts for the supply of goods or services. The problem is that these T&Cs are bound to conflict with each other, in which case only one party’s T&Cs can prevail. There may only be one winner in the battle of the forms.
The ‘last shot’ approach
The Scottish courts traditionally resolve the battle of the forms on the principle of offer and acceptance. The general rule is that the last set of T&Cs that are put forward before contractual acceptance occurs will apply to the contract.
This analysis was adopted by the court in Grafton Merchanting GB Ltd v Sundial Properties Ltd [2013] 1 WLUK 643. This case concerned an action for payment in which both parties contended that their T&Cs applied to the contract. The defender had completed an application for a trade credit account which contained the pursuer’s T&Cs. However, when the defender submitted their purchase order, this was subject to the defender’s T&Cs. The court held that by submitting the purchase order, the defender had made a counter-offer to contract on its own conditions. The pursuer then processed that order and by doing so accepted the defender’s counter-offer. The result was that the defender’s T&Cs applied to the contract.
The ‘last shot’ doctrine is typically the default solution in a battle of the forms. However, there is a risk that this approach could encourage inappropriate attempts to be the firer of the last shot who secures the T&Cs. For example, the purchaser may respond to a supplier’s acknowledgement of order form with a further attempt to instate their own T&Cs into the contract. This is likely to conflict with the normal industry practice for concluding deals and undermines the purpose of concluding deals on standard terms, which is to keep exchanges to a minimum and conclude contracts as efficiently as possible.
Over-ruling the ‘last shot’ approach
In Tekdata Interconnections Ltd v Amphenol Ltd [2009] EWCA Civ 1209, the Court held that while the last shot approach should be adopted in most cases, it may be displaced where the documents exchanged between the parties and their conduct suggest that other terms were intended to prevail.
The Court of Session applied this rule in Specialist Insulation Ltd v Pro-Duct Ltd [2012] CSOH 79. In this case, the defender contracted with the pursuer for the supply of ductwork on a cricket ground.
In October of 2010, the pursuer sent the defender a quotation that was subject to their standard T&Cs. This included a clause that required a written agreement in order to change the terms that applied to the contract.
In response, the defender placed an order with the pursuer. That order stated that the contract would be governed by a different set of standard conditions. However, this document required execution and despite being signed by the defender, it was never signed by the pursuer. Nevertheless, the pursuer supplied the defender with the ductwork, and a dispute emerged.
The Court diverged from the ‘last shot’ analysis and found that the pursuer’s T&Cs applied to the contract. This is because:
- The pursuer’s standard terms made it clear that different terms would only apply if this was agreed in writing; and
- The document sent in response to the quotation by the defender specified that it required execution to be accepted. As the pursuer never signed this document and the defender chose not to question the pursuer’s failure to sign, the pursuer had not accepted the defender’s T&Cs.
Overriding Clause
It is common for parties to include an overriding clause in their T&Cs which states that their terms will always prevail. In TRW Ltd v Panasonic Industry Europe Gmbh [2021] EWHC 19 (TCC), the High Court confirmed that an overriding clause will be effective provided that it is expressly agreed from the outset. This case concerned a contract for the supply of resistors. At the outset of the parties’ relationship, the buyer signed the seller’s customer file thereby agreeing to their standard terms. The seller’s terms contained a clause which stated that:
‘Conditions of the buyer diverging from our terms and conditions shall not be valid even if we effected delivery or rendered services without reservation.’
This precluded the buyer’s T&Cs from applying to the contract with the supplier. The court found that because the buyer had accepted this clause, the only way for the buyer to evade the supplier’s standard terms in favour of their own T&Cs was to conclude a written agreement to that effect. As no such agreement was reached, the supplier’s T&Cs applied to the contract.
This decision demonstrates that there are steps that parties can take to displace the ‘last shot’ analysis in a battle of the forms. It also highlights how easily standard terms can be overlooked which can have significant consequences. It is important for parties to be aware of the content and effect of standard conditions to avoid being caught out like the buyer was in this case.
Protecting yourself in a battle of the forms
Parties can take precautions to mitigate the risk of being caught out by standard T&Cs.
Firstly, parties should always review T&Cs that are sent to them as part of a transaction, thought may not be practical to review every set of T&Cs for every transaction as this would incur additional cost and time. A solution might be to identify what terms of the contract are important and most likely to affect the business. Parties can focus on reviewing these terms and make a commercial decision as to whether other terms should also be reviewed.
Secondly, it is good practice to include a clause that states that any departure from the T&Cs will only be permitted if it is agreed in writing. While these will not definitively sway the battle of the forms in one party’s favour, this is a factor that the court may consider in determining which party’s T&Cs apply.
Additionally, if you decide to include a clause that states that a signature must be obtained in order to constitute acceptance, it is essential to ensure that a signature is actually obtained.
The battle of the forms is a tricky area of the law to navigate. Relying upon standard terms and conditions can be practically and legally beneficial, however, parties should be clear on which T&Cs apply in order to avoid being caught out by a contractual term further down the line.
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