Although it involves a twist, as each party was trying to argue that the other’s standard terms should apply, the Specialist Insulation case is a timely reminder of the importance of being clear about which terms apply to a contract. Where a contract is drawn up and signed by both parties there is rarely any doubt about the terms which apply. However, in the real world, contracts are often formed by the exchange of emails, quotations and purchase orders. In these circumstances, it is not always clear which terms will apply (the buyer’s or the seller’s) and a classic “battle of the forms” situation arises.
Suppliers will generally want their own standard terms to apply to protect their position, to ensure consistency of approach and to avoid the need to negotiate terms on a case-by-case basis. However, there is no point in a supplier having its own standard terms if they are not incorporated in the contract. The traditional analysis of the “battle of the forms” is that the “last shot wins” (ie, the last set of terms to be notified by one party to the other will be the terms that apply to the contract). It is, therefore, important that the supplier does everything it can to ensure that its terms apply.
Our advice to clients is often that it is impossible to guarantee that your terms will apply in every situation. However, you can significantly “up your game” and increase the chance of your standard terms applying, if you follow these simple steps:
- Make sure that your website, proposals, quotations and order confirmations all clearly set out or make specific reference to your standard terms and where these can be found
- Ensure that your sales staff are trained, when taking orders, to state that you only trade on your own terms and offer to provide a copy of those terms to the customer
- Be vigilant of the purchaser trying to introduce its own terms (often through a purchase order) and, if the purchaser’s terms are received or referred to, make clear that you will only contract on your own terms before accepting any order
- Where orders are to be accepted on a regular basis from regular customers, send those customers a copy of your standard terms, making it clear that you only supply on those terms