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If you intend to deal on your own standard terms and conditions, where do you put them? If you are a buyer, you might put them on the back of your purchase order. You may even just state that they are ‘available on request’. Or if you are a seller, you might put them on the back of your order confirmation form, or even your invoice. But have you ever wondered what happens when both parties to a contract try to incorporate their own terms and conditions in this way? Whose terms and conditions will prevail then?

This is called the ‘battle of the forms’ and a recent TCC case [1] highlights what factors a Court will take into account when deciding who will win such a battle.

The starting point is that where a party (party A) makes an offer on its terms and conditions, and the other party (party B) then accepts that offer, but on its terms and conditions then, if the parties then perform the contract, the contract will be on party B’s terms and conditions.

However, the story does not end there. Each party’s conditions must be reasonably drawn to the attention of the other party for them to be effective.

So how do you reasonably draw the attention of the other party to your terms and conditions?

The obvious way to do this is to make it clear on your purchase order, order confirmation or invoice that the transaction is subject to your terms and conditions. Those terms and conditions should be sent with the purchase order, order confirmation or invoice.

It is common practice to set out terms and conditions on the reverse of these documents. Unfortunately, it is also quite common for parties to send these documents by fax or email, and forget to include the reverse page with the standard terms and conditions.

You might think that if you forget to include the page with your terms on it, then they will not have been drawn to the attention of the other party and so not be incorporated into the contract. However, a Court may deem you have drawn the attention of the other party to them if:

  1. you have previously sent the other party your terms and conditions as part of a ‘consistent and unequivocal course of dealings’ with them. This does not have to be over a long period of time, and three of four occasions may well suffice, but it has to be enough for the other party to have known about your terms and conditions;
  2. if your terms and conditions are standard industry terms and conditions, and the other party is familiar with them.

The key point is that you must give the other party reasonable notice of your terms and conditions. It is good practice to supply the other party with them at the outset of your relationship, and make clear (in writing) that you are dealing on those terms and conditions. You should then check all formal documents sent by the other party subsequently, to make sure that they do not contain their terms and conditions. If they do, you should make it plain that you will not be dealing on those terms and conditions.

For more information, email blogs@gateleyplc.com.

[1] Transformer and Rectifiers Limited v Needs Limited [2015] EWHC 269(TCC)

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This blog is intended only as a synopsis of certain recent developments. If any matter referred to in this blog is sought to be relied upon, further advice should be obtained.