Battle Of The Forms

It is now common for businesses to adopt standard terms and conditions, but if both the supplier and purchaser try to impose their own standard terms into a supply contract, difficulties can arise in determining whose terms will prevail.

If a supplier offers to contract on its terms and the purchaser attempts to accept but tries to impose its own terms at the point of "acceptance", there is no acceptance at all. Instead this is a counter offer, which is then open to acceptance by the supplier, whether by performance or otherwise.

In practice, this means that the last set of terms despatched prior to the acceptance or performance will be the last shot fired in what we call the "battle of the forms" and will therefore prevail. This can be bad news if those terms are less favourable.

How do you ensure your terms prevail?

Drafting - some terms and conditions incorporate a prevail clause which states that the supplier's terms and conditions will take precedence over any other terms introduced by the purchaser. This, however, will not be effective where the buyer fires the last shot in the battle of the forms and the parties contract on the purchaser's standard terms and conditions. This is because the supplier's terms and conditions, which contain the prevail clause, will not form part of the contract.

Negotiation - this can be a lengthy and costly solution. The evolution of standard terms and conditions were seen as a method to avoid the need for negotiation thereby making the contracting process more efficient. This is therefore unlikely to be a satisfactory conclusion for either party.

Pre-contractual documents - the supplier should ensure that its terms and conditions are included in as many pre-contractual...