Contract Formation And The 'Battle Of The Forms': Top Tips For Developers

• Published date: 02 March 2021
• Law Firm: Walker Morris
• Author: Claire Acklam

Claire Acklam, a Senior Associate solicitor in Walker Morris' Commercial Dispute Resolution team who specialises in resolving development disputes, explains the essentials of contract formation. In particular, Claire offers practical advice for developers who negotiate and contract - often with suppliers - on standard terms and conditions.

Contract formation and the 'battle of the forms': What are the issues?

Contracts relating to the development of land and property commonly include promotion agreements, joint venture arrangements, overage provisions, agreements for sale and options to purchase, among others. These types of contracts are often negotiated and drafted meticulously, as the schemes that they underpin are usually high value and the issues that arise are complex, fraught with risk and particular to their own site and factual circumstances ¹.

It is important to note, however, that development schemes also involve a multitude of other contractual arrangements - for example the numerous arrangements covering the supply of goods, materials, labour, services, and so on. Many such arrangements are dealt with informally and/or orally, often as a result of long-standing relationships; and many are dealt with via e-mail and/or conducted via standard terms which may be noted on, say, the reverse of invoices or other payment or process documents or communications.

Regardless of the means by which a contract comes into being, once it has been formed its terms are legally binding on the parties. It is therefore vital that the parties understand exactly the terms that are incorporated into their informal/oral contracts; and whose terms prevail when contracts arise following an exchange of 'standard' documents.

Formation of contracts: back to basics

A contract is formed when all of the following key elements are present: offer; acceptance; consideration (that is, money or money's worth); certainty of terms; and intention to create legal relations ².

Contracts can be made orally (face-to-face or via some communication medium such as the telephone); via an exchange of e-mails or other correspondence; or they can even arise by virtue of the parties' conduct. Crucially therefore (with some limited exceptions) contracts can be formed without any written documentation or other formality whatsoever. In the same way that a contract can be formed without any formality, so too can it be varied without any formality.

Battle of the forms

Where contracts come into...