Going in to battle: whose terms apply?

The battle of the form occurs when two entities are negotiating the terms of an agreement, however both parties intend to contract on their own term of business.

Can you see why this may be a problem?

Let me explain what this might look like in practice.

Party A sends a purchase order attached with their standard terms. Party B accepts this purchase order and also sends their companies standard terms.

Whose terms prevail?

Typically the battle is won by the contracting party who in essence fired the ‘’last shot’’. This is therefore the party who served their terms and conditions last, and there were no clear objection of the same. However, as we all know by now, the law is rarely set in stone, and the Court ultimately has the discretion to determine whose terms and conditions prevail. The Court has even in some cases determined that neither party to the contract has incorporated their terms.

Let’s take a quick look at some interesting cases surrounding this battle!

TRW Ltd -v- Panasonic Industry Europe GmbH [2021] EWHC 9 (TCC)

The Court of Appeal held that although in a traditional battle of the forms dispute, the terms and conditions of the party who fired the ‘last shot’ are applicable, in this case, it was the seller’s first shot which prevailed.

The dispute was in relation to sale of resistors by a German seller (Panasonic Industry Europe GmbH) to an English buyer, TRW Ltd. In 2011, the buyer had signed the seller’s ‘customer file’ which agreed that the buyers signature would be legally binding and that the buyer had ‘received and acknowledged’ the seller’s standard terms, which were printed on the reverse of the document.

However, in 2016 when the buyer made an order, it was provided to be done in accordance with the buyer’s standard terms, and the seller was deemed to have been aware and accepted. As such, when a dispute arose, the buyer commenced proceedings before the English High Court, as the specified  jurisdiction within their standard terms. In retaliation the seller applied to set aside the service of proceeding on the basis that within their standard terms, the jurisdiction was Hamburg, Germany.  

The question before the Court was therefore whose standard terms and conditions would apply?

In this case the Court ultimately decided that the seller’s terms and conditions applied reasoning, it that the sellers terms had been deliberately drafted to protect against the ‘last shot’ doctrine, and there was clear consideration in 2011 that if the buyer purchased from seller, the seller’s standard terms would prevail.

The decision in this case highlights that the party sending the ‘last shot’, will not always win the battle to determine whose standard terms and conditions will prevail. Instead, an agreement at the outset that one party’s standard terms will govern all future transactions can operate to good effect, as in this case.

Olley -v- Marlborough Court Ltd [1949] 1 KB 532

Olley was a guest in the defendant hotel. On arrival Olley paid for a week in advance then went up to the room. In the room there was a notice displayed stating that the proprietors would not be responsible for any items lost or stolen unless handed to them for safe keeping. Olley left the room and deposited her key in reception before leaving. You can guess what happened next?

The key was taken and several items stolen. Olley sought damages and negligence.

Olley was successful in her claim and recovered the cost of the stolen items in their entirety. The exclusion clause had not been successfully incorporated into the contract because the contract was concluded at the reception. The notice to exclude liability was not visible until after the contract was formed.

Blue-Sky Solutions Ltd -v- Be Caring Ltd [2021] EWHC 2619 (Comm)

The High Court held that a supplier’s terms were incorporated by refence to when the customer signed an electronic purchase order that contained wording that the customer acknowledged that it had accessed and read those terms on the supplier’s website.  However, a clause within those terms that required the customer to pay early cancellation fees was not incorporated on the grounds that it was onerous, and the supplier had not done enough to draw to the customer’s attention to it.

The clause had not been fairly and reasonably brought to the customer’s attention, taking into account that it had not been told prior to receiving the order form, or its potential exposure to a substantial contractual liability if it decided not to continue with the contract.

At Sewell Law, the team know a thing or two about contract.

If you have any queries concerning this or indeed any contractual issue, please do not hesitate to get in touch.