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Ensure Your Terms and Conditions Apply


Published Autumn 2013

It is all well and good ensuring that your standard terms and conditions are well drafted and regularly updated, but if they are not brought to the other party’s attention, they will be worthless.

For a business’s standard terms and conditions to be binding, those terms must be incorporated into the contract between the parties. Where there is no signed contractual document, this issue will often turn on whether the party seeking to rely on the terms and conditions has taken sufficient steps to bring them to the attention of the other party. The degree of notice required is likely to depend on the nature of the disputed term.

If a term is contained in an unsigned document (for example, a ticket or a notice), the terms will only form part of the contract if reasonable steps have been taken to bring them to the purchaser’s notice before the contract is made. However, where there are any relatively onerous or unusual terms, a court may require more notice to bring these to a consumer’s notice.

Standard terms and conditions

Where you rely on standard terms and conditions, it is imperative that these terms and conditions are bought to the other party’s attention before the contract is formed. Referring to the existence of terms and conditions on the reverse of an invoice, for example, is post-contractual and will not incorporate those terms into the contract

Where corresponding on paper or email (and not trading through a website), to be safe you should attempt to make reference to your standard terms and conditions at every juncture. This could be by having a standard signature at the end of every email for example that indicates that all trade is conducted pursuant to your terms and conditions and informing the reader as to the location of those conditions. Reference should also be made on all other contractual documentation, including quotations, tenders, purchase orders and acceptances. Copies of terms and conditions should be sent, preferably by email, with contractual documentation. Email correspondence is preferred as if a dispute does arise, proving the sending and receipt of the contractual documentation is a somewhat easier task.

“Battle of the Forms”

Often businesses will trade together with competing sets of terms and conditions. This can give rise to the scenario where a business may, for example, give a quotation giving reference to that company’s terms and conditions and to be met with a purchase order from the other party referencing their own terms and conditions. In such circumstances a court is left to determine which party’s terms prevail. This is known in legal circles as the battle of the forms.

The court will usually determine that the terms and conditions referred to last prior to the contract being formed will be the terms that will apply to the contract.

In practical terms this mean that when negotiating a contract you should be vigilant to ensure that where the other contacting party refers to its standard terms and conditions you need to respond to clarify that any business will be conducted on your own standard terms. These can often mean contacting the other party directly to agree terms and where necessary vary standard terms by way of a side letter.

Website Trading

Incorporation issues are particularly important in website trading. It is generally considered that including website terms of use will be effective to incorporate them into the contract as long as reasonable steps are taken to bring the existence of the terms and conditions to the notice of the visitor or buyer before the transaction is concluded.

Current website technology allows for an ascending scale of certainty when it comes to bringing website terms to the attention of the visitor, including the following:

  • A link on the website to the terms and conditions;
  • A statement that use of the website means acceptance of the terms and conditions;
  • A visitor being forced to click an “I accept” button before proceeding with any order;
  • A visitor being forced to scroll down the terms before clicking on an “I accept” button.

Website owners should therefore make a risk assessment and decide what the best balance is between ease of use for the visitor (and therefore increased hit rates) and certainty of incorporation in accordance with the principles mentioned above.

Summary

  • Businesses should highlight any potential onerous clauses to the customer’s attention.
  • Businesses should make sure terms and conditions are incorporated properly. The best way to do this is to email standard terms and conditions to the customer at the time of accepting the order and keep a copy of this email.
  • Any website orders should force a customer to accept the terms and conditions before making any purchase.
  • Traders need to be vigilant for a “battle of the forms” scenario and where necessary take steps to clarify the situation.

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