The ‘battle of the forms’ is a phrase which is used to describe the common scenario in which contracting parties compete to ensure their standard terms and conditions apply.

In the second of our six-part blog series about commercial contracts we look at the practical ways businesses can ensure their terms and conditions are incorporated into their business dealings, and who is likely to come up trumps in the battle of the forms.

The traditional approach

In the first blog in this series we considered what it takes to form a legally binding contract and examined what is meant by an offer and an acceptance (Commercial contracts: a practical guide for businesses – Pannone Corporate). When considering which contract terms apply, these principles again become important as the court will examine whether there has been an offer to contract on specific terms which has been unequivocally accepted.

This traditional approach can give rise to two contrasting examples:

• where a supplier sends its standard terms of business and those terms are accepted by the customer, either expressly or by conduct in continuing to deal with the supplier on those terms, the supplier’s terms will govern the contract.
• where a supplier sends its standard terms of business and a customer responds with its own standard terms of business, the customer has in that case rejected the supplier’s terms and introduced a counter-offer to contract on its terms. The court will then be looking to see whether the supplier accepts the customer’s terms whether expressly or by its conduct.

Where competing terms of business are at play, the court will be looking at the chronology of when offers were sent and the behaviour of the parties in determining the point at which a set of terms has been accepted.

Last shot fired

More often than not, the last set of contractual terms presented without any objections being raised will be deemed as accepted. This is often referred to as the “last shot”.

For example, where a customer places an order on the basis of its standard terms and the supplier responds with its own standard terms, if the customer then proceeds to place the order and accept delivery then the last contractual terms fired will be deemed to govern the relationship (in this case the supplier’s terms).

A misfired shot

A risk for parties is failing to adequately bring terms to another party’s attention.

Standard terms and conditions must be readily available to the other party if they are to be capable of being accepted. If a document is sent by email with terms and conditions on the reverse, those terms must also be emailed if they are to be relied on.

Similarly, if documents are sent with a link to website terms and conditions, the link should be a live link through which the contractual terms can be accessed.

The court will look at all the facts of a case to determine whether or not terms and conditions have sufficiently been brought to another’s attention.

Course of dealing

The last shot fired doctrine can be displaced where the correspondence between the parties or their conduct shows that they intended to contract on some other terms. The court will examine all the evidence in the case to determine the prevailing terms.

For example, where there has been a framework agreement entered into in relation to the terms governing future supplies then a last shot fired may not succeed in overriding that framework. Similarly, where there has been a course of dealing between parties pursuant to one party’s terms then it may be difficult to displace that by shooting across competing terms, without something more.

The wording of a party’s terms may also help to guard against the last shot fired principle. In the case of TRW Ltd v Panasonic Industry Europe Gmbh (2022), the last shot doctrine was not accepted. Instead, the judge concluded that the first set of terms sent (being the seller, Panasonic) applied. Panasonic’s general conditions protected it from falling victim to the “last shot” doctrine, as it disapplied any conditions of TRW that diverged from its own terms, and the parties continued to deal with one another on that basis.

Practical Implications

Losing out in the battle of the forms can have commercially catastrophic consequences for contracting parties. It is therefore important that businesses consider their systems and processes when entering into new contracts to ensure they are legally and commercially protected through the governing terms. In practical terms, businesses should consider:

• including reference to standard terms and conditions on all pre-contract documents, to try to ensure they fire the last shot.
• negotiating and agreeing the contractual terms which will govern relations. This avoids any ambiguity as to whose terms apply.
• requiring parties to sign contractual terms so that it is clear that terms have been accepted.
• whether there has been an earlier framework agreement or a course of dealing which may be regarded as taking priority.
• training staff on the risks that contractual terms presented could be found to be incorporated by conduct. Failure to review and understand these terms could mean that a business could find itself bound by another’s standard terms.
• ensuring its terms and conditions are well drafted in order to provide protection against the last shot, as in the Panasonic example.
• making sure that terms are sufficiently brought to another’s attention. If terms are printed on the reverse of documents being sent electronically, make sure the terms are also sent. If being sent via a website link, make sure this directs to a live copy of the terms and conditions.

Finally, if parties do not in fact intend to be bound by contractual terms until a formal document is signed, or further terms are agreed, they should mark all negotiations, correspondence and draft agreements as being ‘subject to contract’ to avoid inadvertently being bound to draft terms.

If you would like to discuss this blog, please contact Sarah Bazaraa on 07920 237599 or by email to sarah.bazaraa@pannonecorporate.com