Whose Set Of Standard Terms Applies To The Contract?

The above question is frequently asked by parties who wish to incorporate their own standard terms into a contract but are faced with the other contracting party's conflicting terms.

It is a common situation for businesses to want to contract on their own standard terms and this scenario is frequently referred to as the battle of the forms. The battle of the forms could occur, for example, when one party provides a quotation for a supply of goods and/or services that is accompanied by the party's conditions of sale, and the other party accepts that quotation with a purchase order subject to its own standard terms.

The issue arises when neither of the parties explicitly accepts or rejects the other party's standard terms and proceeds to perform the contract.

There are several possible outcomes resulting from the battle of the forms scenario:

The last dispatched set of terms prevails Neither party's terms apply and some other express terms are incorporated into the contract Neither party's terms apply and implied terms are incorporated into the contract No contract is formed The first outcome is most likely to occur in a situation where the last set of terms despatched by the contracting party is followed by performance of the contract. The act of sending of the last set of terms is often referred to as the "last shot". This well established common law doctrine is unlikely to be displaced unless it could be shown that the contracting parties' conduct and any documents passing between the parties show that they intended to rely upon some other express terms, as set out in correspondence, for example.

The second possible outcome could therefore occur provided it could be shown that those "other" express terms have been incorporated into the contract by a course of dealing between the parties. In order to successfully argue that terms...