The “battle of the forms” arises where two businesses each seek to impose their standard terms and conditions of business into the contract between them, at the time the contract is created.
The quintessential scenario is where one business puts forward an offer, seeking to incorporate its standard terms, and the other party seeks to accept the offer but on its own terms of business.
Such scenarios can give rise to fundamental uncertainty as to the terms of the contract, whose terms (if any) prevail and, in some instances, even raise doubt as to the very existence of the agreement.
In construing whose terms prevail in any agreement, the Courts will examine the correspondence leading to the creation of the contract, and in doing so will apply the general principles of contract formation.
The extent to which any such terms have been incorporated (or any party can be deemed to have acquiesced to the other’s terms) is a matter of fact and degree. This can be a difficult and protracted exercise for the Courts, resulting in costly proceedings for litigants.
It is therefore prudent for businesses to adopt procedures that increase their prospects of successfully and clearly incorporating their standard terms during the formation of the contract.
Broadly, the terms put forward prior to unequivocal acceptance by one party prevail.
Parties should draw attention to their terms of business at an early stage and in any pre-contract documents, such as quotations. It is not enough to draw attention to the terms once the contract has formed in written correspondence.
Businesses should also formally reject standard terms of business presented by the other party and should reassert the primacy of their own terms in writing, to ensure that they fire the ‘last shot’ in the battle of the forms.
For assistance with commercial agreements, including standard terms and conditions of business and contract formation, please contact our firm’s business team: