Forming Contracts – Tekdata – the Battle of the Forms

by Kidd Rapinet on January 13, 2010

At the end of last year the Court of Appeal had to look at a legal issue which arises very frequently in practice – whether a seller’s or a buyer’s contract terms apply. This is known as the “battle of the forms”.

Colin Butler a partner in Kidd Rapinet’s London Litigation Department says:

“In Tekdata the court upheld the traditional view – that whoever sends their terms last before the contract is made wins and their terms apply. This case concerned the chain of supply to Rolls Royce as ultimate purchasers of various goods. Lord Justice Longmore, giving the leading judgement in the Court of Appeal, and overturning the High Court below, said ‘So, although I am not saying that the context of a long term relationship and the conduct of the parties can never be so strong as to displace the result which a traditional offer and acceptance analysis would dictate, I do not consider the circumstances are sufficiently strong to do so in this present case. Indeed I think it will always be difficult to displace the traditional analysis, in a battle of forms case, unless it can be said there was a clear course of dealing between the parties. That was never proved. For my part, I would allow this appeal and order that it is the terms and conditions of the Appellants that apply to the contracts contained in or evidenced by the purchase orders referred to in the Particulars of Claim.’

“What the court meant by this was that the company which sent its terms last found that they applied. In practice businesses (a) should ensure they have terms of sale and purchase (b) send them out, have them on new order forms and new customer letters, set them out on brochures and on websites and perhaps even send them once a year to all existing customers as a reminder and indeed in some cases may have customer or suppliers sign the terms, thrusting them at the other party as often as possible (c) always reject the other party’s terms (d) order acknowledgment forms, insist the supplier’s terms apply or conversely have a stock respond to order acknowledgements which purport to do so, applying the buyer’s terms. Many of the commercial disputes before the courts in this recession would not be there had the parties had clear written terms.”