Battle of the Forms: Legal Considerations in Contract Law

The Battle of the Forms occurs when two businesses are negotiating the terms of a contract, but each party wants to contract using its own T&Cs. This is a common situation in contracts for the supply of goods or services, as each party will have its own T&Cs that it seeks to contract on; however, these T&Cs will almost always conflict with each other. 

A common example is purchasing office supplies. The company will send a purchase order for the supplies that includes their standard terms, but the Supplier confirms the order and sends their own delivery note with different terms. If there is an issue with the supplies, both parties will argue that their terms will apply, so there is a question as to which terms actually govern the contract. This article will explore some potential outcomes within a Battle of the Forms.

Understanding the Traditional Approach

The courts typically apply a traditional offer and acceptance analysis when determining which terms govern the contract. This means looking for a clear acceptance of terms through words or conduct. The general principle is that the last set of terms sent before acceptance or performance will prevail – known as the “last shot” doctrine. 

Possible Outcomes in Battle of the Forms

There are four primary potential outcomes when a battle of the forms situation arises:

One Party’s Terms Prevail

Usually, one set of terms will prevail – usually those last sent before performance began (the “last shot”). This outcome provides certainty but may not reflect both parties’ intentions.

Express Terms are Incorporated

Sometimes, the court may find that specific terms discussed in correspondence or contained in a framework agreement should govern, rather than either party’s standard terms.

Implied Terms Fill the Void

If neither party’s standard terms are successfully incorporated, the contract may be governed by implied terms or statutory provisions.  

No Contract Formation

In rare cases, the court might determine that no contract was formed, leaving only compensatory remedies available. This means the only available remedies are those aimed at returning the parties to their original positions and recovering any benefits unfairly gained.

However, this is rare, particularly when performance has already begun.

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Protecting Your Position

As a business owner, you can implement several strategies to increase the likelihood that your terms will prevail. Some of these strategies are:

• providing your terms to your customer early in the negotiation process;
• ensure terms appear on all pre-contractual documents;
• maintain consistent order processing procedures and build up a consistent course of dealing using your terms;
• document all communications thoroughly; and
• use clear acceptance provisions within your contracts.

Framework Agreements as a Solution

Framework agreements are used where services are provided pursuant to statements of work or order forms which form part of the main contract. A framework agreement can provide certainty and avoid battles of the forms entirely. Key elements of a good framework agreement should include:

• clear precedence clauses;
• explicit terms regarding which conditions apply;
• procedures for order placement and acceptance;
• dispute resolution mechanisms; and
• term and termination provisions.

Best Practice Procedures

The best practice for your business will depend on whether you will predominantly supply or receive goods.

Suppliers

For suppliers, some key practices are to:

• avoid making open offers that could be accepted on customer terms;
• include standard term references on all documents;
• require written order/acceptance exchanges;
• maintain consistent documentation practices; and
• regularly review and update procedures.

Customers

For customers, some key practices are to:

• use standard purchase order forms;
• ensure terms are clearly communicated;
• keep detailed records of all communications;
• consider negotiating key terms upfront; and
• maintain audit trails of all transactions.

Key Takeaways

The battle of the forms remains a complex area of contract law that requires careful attention to detail and proper procedures. Success in ensuring your terms prevail depends on having transparent processes in place and following them consistently. Key points to remember:

• implement clear procedures for handling orders and terms;
• consider framework agreements for regular trading relationships;
• ensure terms are properly communicated and documented;
• maintain consistent practices;
• regularly review and update your procedures; and
• seek legal advice when establishing procedures.

If you need help with your contract negotiations, our experienced contract lawyers can assist as part of our LegalVision membership. For a low monthly fee, you will have unlimited access to lawyers to answer your questions and draft and review your documents. Call us today on 0808 196 8584 or visit our membership page.

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