Battle of the Forms – who has the last shot?
The “battle of the forms” refers to the situation where two businesses intend to enter into a contract, but both attempt to do so using their own terms and conditions. Typically one party issues a quotation or a purchase order incorporating their terms and the other party responds by issuing a document that includes their terms.
Any ambiguity as to the contract terms may not be an issue at the time the contract is concluded but if later there are problems with the products or services supplied, the question of whose terms take priority and are incorporated into the contract can become a central issue in the dispute, as it cannot be both.
To answer this question the courts will seek to establish whether an offer was made by one party which was accepted by the other, and whether one party has agreed to the other party’s terms.
The recent case of BDW Trading Ltd v Lantoom Ltd [2023] illustrates the issue in the context of a building development. BDW Trading built homes with materials supplied by Lantoom. Householders began to notice cracking and spalling within the stonework and after an investigation, it was discovered that the cause of the cracking was down to the stone itself.
However, when the parties began to argue about which of them should bear the liability, a “battle of the forms” commenced. BDW’s purchase order had included their terms and conditions on the back, but Lantoom had later issued a delivery note which included their own terms and conditions.
After reviewing evidence of the parties’ negotiations and email discussions, the judge concluded that BDW’s terms were incorporated into the contract by reference to when Lantoom commenced ordering the stone. The fact that they ordered the stone indicated that a contract had come into existence by that point, and that the contract included BDW’s terms which stated that all materials would be of satisfactory quality for their purpose and provided BDW with an indemnity in respect of any unsatisfactory equipment.
Although Lantoom had delivered the stone to site with a delivery note which included Lantoom’s terms and which BDW’s staff had accepted, the judge concluded that the delivery note came too later to be incorporated within the contract. This meant Lantoom could not rely on any provisions in its terms to defend BDW’s claim and so the court found against Lantoom because the stone did not meet the quality standards required by BDW’s terms. The judge also commented that even if the contract had incorporated neither Lantoom’s terms nor BDW’s terms, Lantoom would have still been liable by virtue of the terms which would have been implied into the contract by virtue of the sale of goods legislation.
This case acts as an important reminder of the dangers to a business of proceeding without a clear contract in place. In particular once work has begun, it is likely that there is a contract in place and so if only one party has provided its terms to the other at that point, it is likely that they will take priority over any terms the other party puts later forward.
If you have any questions arising from this article or would like advice on how to ensure you’re your standard T&C are incorporated into your contracts, please contact [email protected]
