Avoiding the “Battle of the Forms” in Commercial Contracts

The term “battle of the forms” refers to a common situation that arises when parties exchange communications with a view to entering a contract, and each prospective party attempts to incorporate its own standard terms into the contract.

The classic situation arises when one party makes an offer that incorporates its standard terms, and the other party purports to accept that offer with a document that incorporates its own conflicting standard terms.

The question then arises as to which standard terms will prevail in the battle of the forms?

The answer often lies in which party “fired the last shot” so to speak. For example, if Party A’s standard terms were attached or referred to in the last communication leading to the formation of the contract and Party B proceeds on that basis, then Party A’s standard terms will apply regardless of whether Party B’s standard terms were attached to or referred to in earlier communications. In other words, it would have been Party A who fired the last shot in this example.

Each party would prefer that their standard terms should always apply, but the battle of the forms has the potential for uncertainty and future disagreement and should therefore be avoided if possible.

Avoiding the battle of the forms

There are several strategies available to avoid a classic battle of the forms, including the following:

Always fire the last shot

• Although often effective, this strategy is not without risk because it is possible that a party may inadvertently overlook this step. For example, if a party takes any action which is consistent with fulfilling the contract when the other party fired the last shot, then it is that other party’s standard terms which will apply.

Agree an overriding set of standard terms that will always apply to contractual dealings between the parties.

• By reaching this agreement, such standard terms will generally override any other terms which a party may attempt to introduce at a later stage in the contractual relationship.
• This agreement could be reached by the parties simply signing the relevant agreed terms in acknowledgement that they will always apply. Alternatively, the parties could enter what is sometimes called a framework agreement. A framework agreement is essentially an overarching contract entered by the parties which contains all of the standard contractual terms, but which provides that the details of any individual supply will be set out in a separate document, such as a purchase or work order for example.

Indeed, this approach was demonstrated to be effective in the case of TRW Ltd –v– Panasonic Industry Europe GmbH & Anor. In this case, the parties had signed an agreement at a much earlier stage in their contractual relationship and this was adjudicated by the Court of Appeal to override inconsistent terms which TRW Ltd later sought to rely upon.

The decision is therefore important because it evidences that the established battle of the forms principle can be overridden by careful contractual drafting evidencing that the parties had pre-agreed an alternative position.

How can we help?

The Corporate and Commercial team at Wilson Browne Solicitors is ideally placed to advise on all aspects of drafting and negotiating commercial contracts to avoid a potential battle of the forms issues, including through the use of overriding terms or framework agreements.

For a confidential and no obligation initial discussion about how we can help, please contact the Corporate and Commercial team at 0800 088 6004.