It is now common for businesses to adopt standard terms and conditions, but if both the supplier and purchaser try to impose their own standard terms into a supply contract, difficulties can arise in determining whose terms will prevail.

If a supplier offers to contract on its terms and the purchaser attempts to accept but tries to impose its own terms at the point of "acceptance", there is no acceptance at all. Instead this is a counter offer, which is then open to acceptance by the supplier, whether by performance or otherwise.

In practice, this means that the last set of terms despatched prior to the acceptance or performance will be the last shot fired in what we call the "battle of the forms" and will therefore prevail. This can be bad news if those terms are less favourable.

How do you ensure your terms prevail?

Drafting – some terms and conditions incorporate a prevail clause which states that the supplier's terms and conditions will take precedence over any other terms introduced by the purchaser. This, however, will not be effective where the buyer fires the last shot in the battle of the forms and the parties contract on the purchaser's standard terms and conditions. This is because the supplier's terms and conditions, which contain the prevail clause, will not form part of the contract.

Negotiation – this can be a lengthy and costly solution. The evolution of standard terms and conditions were seen as a method to avoid the need for negotiation thereby making the contracting process more efficient. This is therefore unlikely to be a satisfactory conclusion for either party.

Pre-contractual documents – the supplier should ensure that its terms and conditions are included in as many pre-contractual documents as possible such as tenders, quotations, acknowledgement forms and delivery notes. By ensuring that a supplier's document is the last document to pass between the supplier and purchaser immediately prior to the contract being concluded, will ensure that the contract is formed on the supplier's standard terms and conditions. All too often, suppliers wrongly think that by placing their standard terms and conditions on the reverse of their invoice, they will be contracting on their standard terms and conditions.

Conclusion

To make sure that you get the best out of your standard terms and conditions you should follow these basic steps:

  • Train your staff to conclude contracts ensuring that your standard terms and conditions are the last set to pass between the parties.
  • Print your standard terms and conditions on the back of all pre-contractual documents. Just printing them on your invoice will not suffice, as the contract will already have been formed.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.