Battle Of The Forms – Contracting On Your Own Terms

Battle Of The Forms – Contracting On Your Own Terms

Key Contact: Rachelle Sellek

Author: Adam Munn

What is the ‘battle of the forms’?

A ‘battle of the forms’ typically arises when two parties seek to enter into a contract together but both parties want to rely on their own set of standard terms and conditions. For example, a supplier may provide a commercial buyer with a quote for the supply of goods and when sending the quote, the supplier also sends the buyer a copy of their standard terms and conditions.  The buyer, being satisfied with the quote, sends the supplier a purchase order but whilst doing so, also sends the supplier a copy of their own standard terms. In the event that the goods supplied are defective, the buyer may want to bring a claim against the supplier. On this basis, a battle of the forms arises as both parties may seek to rely on their own terms and conditions, believing that they have been incorporated into the contract. Therefore, the question for the courts is whose terms and conditions apply and form the basis of the contract?

The general position

In answer to this, the general rule is that the battle of the forms is won by the party who fired the “last shot” i.e. the party who submitted a copy of their terms and conditions last, which were not expressly rejected by the receiving party, before the contract was performed (partly or in full). So, applying this to the example above, the buyer’s terms and conditions would apply on the basis that these were the last set of terms provided before the contract was performed i.e. delivery of the goods, which were not expressly rejected by the supplier. However, this long-standing position was brought into focus in the recent case of TRW Ltd v Panasonic Industry Europe Gmbh (2021), whereby the High Court held that the “last shot” principle may be displaced by contractual wording.

TRW Ltd v Panasonic Industry Europe GMHB (2021)

In this case, TRW Ltd (the buyer) had agreed to purchase goods from Panasonic Industry Europe (the seller) but later claimed that the goods were defective. Both parties had provided the other party with their standard terms and the High Court had to decide which set applied and formed the basis of the contract.

The seller argued that it was entitled to rely on a signed ‘customer file’ which contained a statement confirming that the buyer had read the seller’s standard terms and agreed that those terms would apply and take precedence over any other terms and conditions. In contrast, the buyer argued that their purchase order (which included their standard terms) were provided last before performance of the contract and therefore, the “last shot” principle should apply. 

In delivering its judgment, the High Court ruled in favour of the seller on the basis that the seller’s terms had been agreed from the outset and the inclusion of a clause excluding any other terms and conditions showed a “clear and precise” intention to deviate from the traditional “last shot” approach. Furthermore, the High Court explained that if the buyer did not intend to be bound by the terms in the customer file, it could have either not placed an order with the seller or requested that the seller agrees to its own standard terms in writing. As neither of these took place, the seller’s standard terms prevailed.

Conclusion

The above-mentioned case serves as a timely reminder to commercial parties intending to do business on standard terms that whilst the “last shot” principle may apply, it will not always guarantee success in determining the outcome of the battle of the forms. Instead, the parties will need to ensure that any terms received during the course of negotiations are carefully reviewed and do not contain any provisions which may potentially affect the outcome of the battle of the forms.

For further information or advice, please get in touch with our Commercial and Technology Team.

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