T&C’s – Whose applies?


21st May 2019

Many businesses rely on their standard terms and conditions when selling products or services. This is a preferred contracting method because it minimises negotiation and allows the business to impose favourable terms that have been devised with the business’s own concerns and interests in mind. However, using standard terms it isn’t entirely risk-free and they need to be used with caution.

Perhaps the most troubling outcomes for a business that doesn’t use its standard terms properly are to learn that its terms don’t apply to the contract, and/or it is unwittingly bound to another party’s standard terms over its own!

The first problem arises because the standard terms weren’t incorporated into the contract, which can happen if they aren’t brought to the other party’s attention (whether at all or not until it was too late).

The second problem arises from “the battle of the forms” (as it is known in the legal world), where each party tries to contract on its own standard terms. As a general rule, the last shot fired wins, so the last set of terms sent before the contract is made will apply. This could happen, for example, where a prospective client sends an email accepting a quotation but in doing so, also attaches a copy of its own terms. In this case, it is likely that the prospective client will win this particular battle and their terms prevail.

The courts analyse these scenarios by applying the traditional principles of contract law (offer and acceptance) but each case has its own facts, so it’s possible for the courts to reach a different outcome to the “last shot” rule. If another party tries to impose its own terms, it’s best not to simply ignore them by continuing with the contracting process without first considering the terms and their implications.

Here’s a handy list of things you can do to increase your chances of incorporating your standard terms and winning the battle of the forms:

  • Make it clear in pre-contract correspondence that any contract will be on your standard terms and either attach or provide a copy of them.
  • Ensure any links that redirect to your terms online are live.
  • Don’t get caught out by the “last shot fired” rule; address your client’s attempts to introduce their own terms.
  • Refine your contracting processes and ensure that your staff are trained and familiar with them, e.g. by ensuring that telephone or face to face discussions are expressed as being on the basis of your standard terms.
  • If you don’t need (and don’t tend to insist on) a signature on your standard terms then avoid stating one is required. Otherwise, it may be more difficult to argue that your terms have been incorporated.

For more information about your standard terms, please call 0345 070 6000 or visit our website at www.emwllp.com

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