Contract Formation: Battle Of The Forms

In the case of Trebor Bassett Holdings Ltd & Anr v ADT Fire & Security, [2011] EWHC 193 (TCC), Mr. Justice Coulson had to consider a wide range of issues relating to the formation of the contract. These included the classic contractual question of whose terms and conditions actually applied.

This case arose out of a fire which destroyed a large confectionery factory. ADT had been engaged to provide the fire protection system. Many different issues arose, the first of which was on whose terms and conditions the parties had contracted. This "battle of the forms" is fairly common, albeit here the stakes were rather high. ADT's conditions purported to limit liability to just under £14,000 as opposed to Trebor's claim for approximately £110million. In these circumstances, the approach of the court will typically be this:

the test is objective, albeit that the court must take into account the factual matrix – i.e. what actually happened; Usually, a contract is formed once the last set of forms is sent and no objection is taken. The "last shot" prevails; acceptance by conduct can be inferred, although conduct will amount to acceptance only if it is clear that the party intended to accept the terms. Acceptance of a delivery of itself may not be enough; where the parties have not agreed which set of standard terms applies, then the only inference that can be drawn is that the agreement was made on the basis that neither set of standard terms would apply; Here, Mr. Justice Coulson suggested that care needed to be taken with the notion that the critical act may be the firing of the last shot. He referred to a CA decision, Tekdata Interconnections Ltd v Amphenol Ltd. Here, the sellers quoted on their terms, the buyers sent a purchase order which stated that the purchase was on their terms but when the sellers acknowledged that order, they repeated that their own terms applied. The Judge at first instance said that whilst the traditional view would be that the acknowledgement was the last shot, it appeared that the parties intended that the buyers' terms should apply. There was a commercial history of the parties contracting on the buyers' terms. The CA disagreed. Where there is a battle of forms, the traditional analysis had to be adopted unless the parties' previous conduct clearly showed a common intention that other terms were intended to prevail. Dyson LJ said:

"The rules which govern the formation of contracts have been long established and they...