Battle Of The Forms - GHSP Inc v AB Electronic Ltd [2010] EWHC 1828 (Comm)

This case involves the familiar scenario in commercial contractual relations known as a "battle of the forms". This is the situation where two parties negotiating a contract submit a series of offers each subject to their own terms and conditions. An acceptance expressed as being subject to different terms to the original offer constitutes a counter offer, which is not capable of concluding a contract. This means that when the contract is finally performed the question remains: on what terms and conditions?

This particular case involves a sale and purchase agreement between the claimant buyer ("C"), a designer and manufacturer of electro-mechanical control systems, and the defendant seller ("D"), a manufacturer of electrical components. The contract was for the sale and purchase of a pedal sensor to be incorporated into an electronic throttle pedal for use in Ford motor vehicles. In 2006 a defective batch of sensors led to vehicles suffering from stumbling engines and uncontrolled reduced acceleration. The losses suffered were significant, however, prior to determining issues of liability and quantum a preliminary issue was ordered to be determined as to whether the contract was concluded on the C's terms and conditions or the D's terms and conditions.

The facts involved a number of purchase orders ("PO") and an acknowledgment of order ("AO") before the contract was finally performed and the goods delivered. The first PO was provided by the C on the 2 November 2004, this expressly referred to the C's terms and conditions and was acknowledged by the D but only to the extent that this was a "kick-off" order with more details to be confirmed such as the schedule and the exact specification of the product. On the 18 November 2004 C sent a new PO with a new engineering drawing, this was also expressed as being subject to C's terms and conditions and was followed by a supplier's schedule on the 23rd November 2004 expressed as subject to the C's terms and conditions. On the 3rd December 2004 C asked D for confirmation that it would be shipping against the PO of 18 November 2004 and on the same day D sent an AO to C which contained on the reverse D's terms and conditions. The contract was then subsequently performed.

C argued that the first PO provided on the 2nd November 2004 had been explicitly accepted by D's email of the 3rd November 2004 acknowledging the "kick-off order". Alternatively, C argued that the first PO and/or PO on the 18th...