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It’s a common misconception that the last Ts&Cs sent in the back and forth between contracting parties, will apply. But this is not the formal test

Introduction

Your business is running nicely, and you’re buying and selling on the basis of your “you-favourable” standard terms and conditions (Ts&Cs) … or so you think. Are you? Are you absolutely certain they apply? After all, they’ve got:

“[Our] Terms and Conditions apply to this [sale/purchase] to the exclusion of all other terms and conditions that law may apply, even if provided to us at a later date.” Or something to that effect.

You’re also confident that you’ve brought your Ts&Cs to the other party’s attention (they must be formally told that your Ts&Cs apply: without this, in a dispute there is little or no chance that your Ts&Cs will prevail – and just displaying them on a website isn’t good enough).

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Battle of the forms

But suppose the other party also has terms and conditions, perhaps with similar wording. This is known as the “Battle of the Forms”. It typically arises when A offers to buy goods from B on their (A’s) standard Ts&Cs (their form) and B accepts the offer on the basis of their standard Ts&Cs (their form).

Who “wins”? You might think that the last set of Ts&Cs sent out in the exchanges will apply (known as the “Last Man Standing” approach). But this is not the formal test.

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The correct test: The contract is formed when an offer is made by one party, which is unequivocally accepted by another party, whether by words or conduct

Test applied by the courts

When deciding a BOTF question, courts apply the offer and acceptance test: the contract is formed when an offer is made by one party, which is unequivocally accepted by another party, whether by words or conduct. (A “prevail clause” like the one above does not work, simply because the question is deeper: which was the offer that was accepted unequivocally?).
Here’s an example of how offer-and-acceptance might work:

  • Customer asks you for a quotation. On their email they says “Our Ts&Cs apply exclusively of all others whatever may subsequently be said or written about this enquiry and any subsequent purchase”. So far: no contract.
  • We reply with our quotation, including “We expressly draw your attention to the condition that this quotation and any ensuing sale is based on [our] Ts&Cs applying, and that they are to be found at [link].” Again, so far: no contract. We’ve offered on the basis of a quotation. They’ve yet to accept. But this is where it becomes more interesting. So, to explore what might happen next….
  • Suppose they phone in saying “We accept; please proceed.” In this case, the contract is struck at this moment – they’ve accepted unequivocally – and the likelihood is that our Ts&Cs will apply.
  • But suppose instead that they email back, to say they accept and include the words that they used in their first bullet above. This is now a counter-offer, since they’ve changed the basis on which they accept, requiring their Ts&Cs. We write back to say that this is great and we’ll proceed. In this case, the contract is struck when we accept unequivocally, and the likelihood is that their Ts&Cs will apply.
  • However, suppose (just as in the bullet above) that they write an email back, to say they accept on their Ts&Cs. BUT THEN we reply saying that that this is great, that we shall proceed (implicitly accepting their cash value of their counter-offer), but including our words from the second bullet above. This now is effectively a counter-offer in turn on our part. If they do nothing more that changes this, and we deliver the goods, then they have by their actions accepted our counter-offer. In this case, the contract is struck at that moment, and the likelihood is that our Ts&Cs will apply.
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But sometimes, a historic course of action may prevail instead

In all the above examples, it has been the “Last Man Standing” that worked …. but only because the other party didn’t shoot them down (to extend this whole battlefield metaphor). It’s worth pointing out, however, that this doesn’t always apply. For example, if there’s been a course of historic dealing that favours one side, this course of dealing may “win”. As already mentioned, Prevail clauses generally don’t generally work (except as a bluff to the other party’s less savvy employees). A shotgun approach (getting one’s own Ts&Cs on as many documents as possible) may work, but there’s still a risk that the other side have the last word on the day.

Recommended approach

All this of course is very much under the control of the Sales/Purchase teams, and it’s perhaps not too unkind to say that neither like getting involved in this quibbly technical stuff that gets in the way of the transaction’s mood-music. Salespeople (quite understandably) are just interested in Making That Sale, and Purchasers (equally understandably) just want the Best Price Available For the Best Possible Product.

Our line on this is to get one’s own teams on-side, pointing out to (for example) the Sales Team – the business’s infantry – that although it’s great that they fill up the commercial bucket with water, it’s no use if that water later pours out of that bucket through holes that they could have stopped up during the sale.

My Inhouse Lawyer has great advice available on ideas to handle all this with your teams. Contact us if you’d like some help.
(As a footnote: why are salespeople the infantry of business? In war, infantry are the only force that can take and hold ground: without them you haven’t got an army at all. Without salespeople, you haven’t got a business (because you’re not selling anything). So: all respect to salespeople. And indeed the infantry).

James McLeod My Inhouse Lawyer
Written by James McLeod
Principal at My Inhouse Lawyer

One of our values (Growth) is, in many ways, all about cultivating a growth mindset. We are passionate about learning, improving and evolving. We learn from each other, use the best know-how tools in the market and constantly look for ways to simplify. Lawskool is our way of sharing with you. It isn’t intended to be legal advice, rather to enlighten you to make smart business decisions day to day with the benefit of some of our insight. We hope you enjoy the experience. There are some really good ideas and tips coming from some of the best inhouse lawyers. Easy to read and practical. If there’s something you’d like us to write about or some feedback you wish to share, feel free to drop us a note. Equally, if it’s legal advice you’re after, then just give us a call on 0207 939 3959.

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