How To Avoid... Disputes Over Your Terms And Conditions

In the second of our new series of articles on "How to Avoid..." common legal problems, Liane Bylett provides some practical advice on steps that you can take to ensure that you don't become embroiled in a dispute over whose terms and conditions apply to a contract, otherwise known as the "Battle of the Forms".

Key points to remember:

How to avoid... disputes over your terms and conditions:

Negotiate the Contract Fire the Last Shot Beware the Exceptions Train Your Staff In business, you may enter into contracts with your customers or suppliers on a regular basis and naturally the process can sometimes become a casual affair. However if things go wrong then disputes can arise as to whose terms and conditions apply to the contract. The situation can often be unclear, particularly when you both send paperwork to each other that attempts to incorporate your own standard terms of business into the contract and no specific agreement is then made as to whose terms will apply.

This is called the "Battle of the Forms" and it is easy to lose the battle if you are not alive to the issues. So what can you do to reduce this risk?

1 – Negotiate the Contract

One way to avoid a battle of the forms is to negotiate the terms of the contract with your customer or supplier and record the agreement in a signed document. This should ensure that both you and the other party are aware of and agree to the terms of the contract. Whilst this will not necessarily avoid a contractual dispute later on, this should ensure that the terms you have agreed are incorporated into the contract.

However we appreciate that it may not always be practicable to negotiate each and every contract, particularly when you could be making or receiving orders on a daily basis. You might therefore choose to negotiate terms at the outset of the relationship in an overarching agreement and then contract on those terms thereafter, which will create a course of dealing.

2 – Fire the Last Shot

The general rule is that if you ensure that you "fire the last shot" before delivery of the goods, you will win the Battle of the Forms. This is illustrated by the following examples:

Scenario A

The seller sends a quotation to the purchaser which states that any sale will be concluded on the seller's terms of business. In response, the purchaser sends a purchase order confirming the order and referring to its own terms of business. On the basis that the order has been placed, the seller simply delivers the...