A situation that often occurs during business to business transactions, in which each business wants its own standard terms and conditions to apply, is the so-called battle of the forms.

Where a supplier offers to contract on its terms and the buyer attempts to accept but tries to impose its own terms, there is no acceptance at all. Instead this is a counter-offer which can be accepted by an unequivocal acceptance by the supplier, or by performance.

In practice, this often means that the last set of terms despatched before acceptance or performance (the last shot fired in the battle of the forms) will prevail.

Battle of the forms disputes are notoriously tricky. Ascertaining the terms of the contract the parties have agreed is a matter of construction and fact.  In the rest of this note we refer to the supplier as sending the first set of terms and conditions but the same logic applies both ways.

Trying to win the "battle of the forms"

At least three different devices have been used in an attempt to win the battle of the forms:

Prevail clauses

One drafting solution which has attempted to address the battle of the forms situation is to incorporate a so-called prevail clause, which stipulates that where, for example, terms are issued by a party, that party's terms will prevail over any terms issued by the other.  For example,

 “Subject to any variation under clause [number] these Conditions form part of the Contract to the exclusion of all other terms and conditions (including any terms or conditions which the Buyer purports to apply under any purchase order, confirmation of order, specification or other document)."

This clause is unlikely to be effective since the standard terms and, therefore, the clause itself will not form part of the contract because it will not have been accepted by the buyer where the buyer is itself seeking to impose its own standard terms by means of a counter-offer.

However, parties continue to use clauses of this kind, as they may bluff the operational staff of the other party into assuming that there is nothing to be gained from seeking to impose their own terms. Sales teams should be aware of this potential problem so that when they receive purchase terms containing such a provision, they know that the supplier's terms can still prevail, and that they should therefore respond in the usual way with an acknowledgement of the order bearing the supplier's standard terms.

Direct negotiations

Another possibility for a supplier when faced with a battle of the forms could be to decide to deal with the conflict of terms directly, by discussing the sale terms with the customer and, if possible, agreeing any variations in a side letter. The disadvantage is that this involves a negotiation of the standard terms, consequently incurring time and expense, which the use of standard terms was originally intended to avoid. However, where the customer in question is seen as particularly important, and there is the possibility of significant repeat business, the extra time and expense involved in agreeing special terms, which could also be used for future transactions, might well be justified.

Shot-gun approach

Alternatively, the supplier could ensure that its terms are included in as many pre-contractual documents as possible, refrain from raising the standard terms as an issue with the customer, and attempt to fire the last shot in the battle of the forms by ensuring as far as possible that the supplier's terms appear on the last document passing between the parties before the delivery of the goods.

The advantage of this is that no time is wasted in negotiating amendments to the supplier's terms and that, assuming that the battle of the forms is won, the supplier's terms will be incorporated without amendment.

The disadvantage is that the risk that the customer might succeed in firing the last shot cannot be entirely eliminated, in which event the customer's terms would be incorporated without amendment.

Tips

Some practical points to bear in mind relating to acceptance:

• You should remind your sales teams that they should never accept an offer (whether by behaviour or otherwise) in the expectation or hope that some unacceptable items set out in the offer can be renegotiated later. After acceptance it will be too late.
• You should have in place a general rule that staff should not work at a customer's site before an agreement being signed. Entering on site without a contract in place (including protective limits of liability in relation to such matters as property damage) could invalidate an insurance policy.
• Once you are confident that you wish to conclude a binding contract, make sure you accept the offer unequivocally. Do not confuse the acceptance message, for example, by dealing with some points and not others.