What is battle of the forms?

Each party wants their Terms & Conditions (‘T&Cs’) to apply and both send their T&Cs after one another, which creates a problem… whose T&Cs apply? T&Cs can be slotted into a variety of different documents including, purchase orders, quotations, or invoices etc.

The parties then begin to perform their obligations under the contract and it’s only when a dispute arises that the parties realise that it hasn’t been made clear whose T&Cs actually apply to the contract.

Lawyers are then called and the battle of the forms begins.

It happens more often than you would think and can happen within so many different industries and can cause you a real headache if a dispute emerges later down the line.

What problems can this cause?

T&Cs can be drafted very differently and can potentially hold the other party to extremely onerous terms. To set out a few:

Liability may be capped for certain types of losses.
Set very specific payment terms and interest accrued in the event of late payment.
Limit refunds or cancellation rights.
Set Service Legal Agreements that may not be achievable.
Set retention of title.
Require disputes to be resolved via a specific process, such as adjudication in the first instance.
Enforce severe termination consequences.

How do we decide whose terms apply?

The Court will resort back to the normal rules of contract formations and the whole exchange, including:

Which document was considered the “offer”.
Was there a clear acceptance.
Was there a counteroffer and was this accepted upon the other party’s terms.
Where the terms properly brought to the other party’s attention.
Where there any objections.

Courts will sometimes apply the “last shot” principle which means that the terms contained in the final document exchanged between the parties before the performance of the contract will prevail i.e. the terms of the party who “fires the last shot” will be incorporated.

What could the outcome look like post-battle?

Depending on the specific facts, a battle over the forms could lead to the following:

One party’s standard T&Cs prevailing if they represent the last offer accepted by conduct or otherwise form part of the concluded agreement.
Express terms outside of your standard terms apply.
Neither set of standard terms apply and the contract is governed by implied or statutory terms.
The contract is rendered void and unenforceable.

How can this be avoided?

Don’t automatically rely on standard documents as this can lead to uncertainty and therefore perhaps consider negotiating a bespoke agreement for each transaction. Yes, this may take more time but will provide much greater certainty and a smoother business relationship.

You need to be alive to the risk. When you have sent out your terms and the other side have accepted, be sure to check that the other party’s terms are not attached to their response and if they are, query this and agree the terms that will govern the contract before performance takes place.

Framework Agreements can be helpful where you expecting to enter into repeated business with the other party. The terms of the Framework Agreement can be drafted to include an acknowledgement that its terms will prevail over any later conflicting terms.

Internal procedures can help keep everything running smoothly, implement a robust internal procedure when entering into contracts to reduce the risk offending up in a legal battle. This could include training staff on what they should be watching out for, using standard documents that clearly incorporate your terms and set thorough contracting procedures.

Here at Sewell Law, as a niche litigation practice, we have a wealth of experience in all manner of contract disputes. If you require any assistance please get in touch.