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Win the battle to win the war: Top tips for incorporating terms

Two people signing a piece of paper Print publication

17/03/2015


We are all familiar with the battle of the forms, where parties make and accept contractual offers and counter-offers each using their own pre-printed T&Cs in the hope that their terms will prevail to govern the contract. Whether a party’s terms will apply, however, can depend on a number of concurrent and often competing factors, such as the ‘last shot’ principle (i.e. whether the terms were the last T&Cs passing before the contract was concluded); whether the terms were properly drawn to the opponent’s attention; whether the contract was stated to be subject to particular terms; and so on. In Transformers & Rectifiers Ltd v Needs Ltd [1], heard recently in the Technology and Construction Court, the judge was forced to conclude as a preliminary issue that neither party’s standard terms had been properly incorporated, such that neither party could rely on their own terms to help them win their wider war. So, follow these top tips to ensure that your T&C’s preside:

  • Knowledge is essential. To be incorporated into a contract, terms must be brought to the other party’s attention.
  • Take particular care where terms are on the reverse of a form; on a website; in an attachment to an e-mail; or elsewhere within promotional material or pre-contractual correspondence. Direct your opponent to where your terms can be seen.
  • Take reasonable steps to draw attention to particularly onerous terms (or risk that they will be found to be unfair and ineffective).
  • Timing is everything. Governing terms will be those prevailing at the time the contract is created. After-the-event attempts to rely on terms printed on invoices and other post-contract documents have been unsuccessful.
  • Where you are only prepared to do business on your own terms, say so. Make dealings expressly subject to your own T&Cs.
  • Consider conduct and previous dealings. Regardless of what the contractual documentation might say, it is possible that parties’ behaviour on the ground might affect the effective terms. Don’t ignore prior or industry-standard dealings and don’t say one thing on paper and do another in practice.
  • Beware inadvertent acceptance – It is possible to accept another’s terms simply by failing to object to them or to assert your own.
  • Deploy specific drafting: include clauses stating that your terms prevail over any issued by your opponent; state that any continuing business or instructions constitutes offer or acceptance on your terms.
  • Ask your opponent to sign and return your terms for the contract to commence or, if you have a continuing relationship, ask your opponent to sign a confirmation that your terms will apply to all the contractual dealings between you.
  • Finally, note that post-contract conduct or correspondence, even oral dealings, can alter or vary governing contractual terms. Again, be careful to be consistent in practice as on paper.

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[1] [2015] EWHC 269 (TCC)

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