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The backbone of most hospitality and leisure businesses is the legion of suppliers and contractors working away in the background to keep things running smoothly.
With the volume of contractual agreements in place with different contractors and suppliers, hospitality and leisure businesses understandably find it simpler to contract on standard terms and conditions.
But what happens when everyone tries to contract on their own standard terms and conditions?
Battle of the Forms
In the legal sector, the term "battle of the forms" refers to a situation that arises when different businesses attempt to contract with each other, and each prospective party attempts to incorporate its own standard terms into the contract.
This usually happens when one party makes an offer incorporating its standard terms, and the other party seeks to accept that offer with a document incorporating its own standard terms.
These terms can often conflict.
Which terms and conditions apply to a Battle of the Forms?
Which terms and conditions apply can often be overlooked, and it is normally only considered when things go wrong.
This is usually when there is a significant conflict between important terms, e.g., rights and notice periods relating to termination or obligations regarding delivery.
It can be difficult to establish which terms prevail, but some of the factors considered are:
- Have the parties agreed to any other terms taking precedence, e.g., is there an overarching framework agreement that applies to this deal?
- In the absence of any framework agreement, often, the last set of terms and conditions dispatched to the other party before acceptance of the contract will prevail. This can sometimes be referred to as a "last shot".
- In some cases, neither set of terms might apply if the court does not consider they were incorporated; for instance, both parties forgot to refer to or enclose their standard terms, and there are no previous dealings. In these circumstances, the court might imply certain terms.
- If no terms are incorporated, the contractual terms may be so unclear they lack any certainty, and the court could determine that no contract has been formed, although this is rare.
- In some cases, a party may be able to rely on previous dealings between the parties to incorporate their terms. This is where the court considers that as a result of their consistent use in previous transactions, it is reasonable that the parties expected those terms would apply to the specific transaction.
Best practice to avoid a Battle of the Forms
Obviously, no business wants to leave the issue of which terms apply until they are already in a dispute, so what steps can be taken to avoid these types of issues?
There is, unfortunately, no guarantee that any specific wording or procedure will ensure your terms prevail, but some things to increase the prospects include:
- Ensure you refer to and enclose your standard terms at any and every opportunity.
- Consider a framework agreement if there is likely to be an ongoing relationship. This framework agreement can then cover ongoing future transactions.
- Ensure employees do not act upon orders before first sending the terms and conditions and confirming that the order is subject to your standard terms.
- Consider making it clear that any pre-contractual documents are not to be deemed offers. This is to avoid acceptance before your terms and conditions have been brought to the other party's attention and incorporated.
- Implement staff training to pick up on attempts by other parties to incorporate their own terms.
- Consider issuing standard order forms. These can expressly refer to and incorporate your standard terms. Note that merely drawing attention to your terms is not generally sufficient to incorporate them. You need clear, unambiguous wording, e.g., the order is 'subject to' or 'incorporates' your terms.
- If you are contracting over the phone, ensure you make it clear the order is subject to your terms or make it clear the discussions are only provisional and subject to the contract (and ensure your terms are incorporated into the subsequent contract).
- Bring your terms and conditions to the attention of the other party. You need to ensure reasonable notice is given. It is best to attach your terms, but it is possible to refer to a link. If you refer to a link, make sure it is a live link with your latest terms and conditions.
Ultimately, even if you take these steps, there can still be arguments over which terms and conditions prevail.
In those circumstances, it is important to obtain legal advice as early as possible, particularly before you attempt to enforce or exercise contractual rights.