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COMMERCIAL CONTRACT VOCABULARY A-Z: B - BATTLE OF THE FORMS

Updated: Feb 5

A ‘battle of the forms’ typically happens when one party to a contract offers to sell goods on its own standard terms and condition and the other party purports to accepts those goods on its own standard terms and conditions.


Commentary

When we think of commercial contracts, we often imagine lawyers and businesspeople sitting around a table and negotiating every term and condition. In fact, commerce would grind to a halt if all contracts had to go through this process. However, if there is no signed contract, problems can arise. For example:


· how do you know when a contract has been formed?

· how do you know what the terms of the contract are?


In order to form a valid, legally binding contract under English law, four elements must be present:


· offer

· acceptance

· consideration, and

· an intention to create legal relations.


Because it is essential to know when, and whether, an offer has been accepted, a ‘battle of the forms’ scenario between two parties can make this question difficult to answer. For example, if party A offers to sell goods to party B on its own ‘standard terms and conditions’, then party B sends its own standard terms and conditions to party A and says something like, ‘We accept your offer on our standard terms and conditions’, has party A’s offer been accepted? And on whose terms?


Under English law, an acceptance must match an offer exactly. This is called ‘the mirror-image rule’. So, in the example above, no contract will have been formed, because the acceptance did not match, exactly, party A’s offer.


English law has developed a general rule for dealing with situations like this. It is called ‘the last shot’ rule. Essentially, in a ‘battle of the forms’ situation, a court would say that the terms and conditions contained in the last document to be sent before the contract was performed are the ones which apply.


However, this general (‘last shot’) rule is not always applied. One example of this is the recent (January 2021) case of TRW Ltd v Panasonic [2021] EWHC 19 (TCC) in the English High Court. [1]


The background to the case is that Panasonic make, among other things, resistors used in vehicle parts. TRW was a customer of Panasonic and bought some resistors. TRW alleged that the resistors were defective and brought legal proceedings against Panasonic.


Panasonic claimed that the English court had no jurisdiction to hear the case. There had been a ‘battle of the forms’ scenario in relation to the formation of the contract. Both TRW’s and Panasonic’s standard terms and conditions contained jurisdiction clauses which provided for different jurisdictions to deal with the matter if a dispute arose.


The judge, Mr Justice Kerr, allowed Panasonic’s application and decided that the German court (the jurisdiction set out in Panasonic’s standard terms and conditions) had exclusive jurisdiction. Although TRW’s standard terms and conditions had been the ‘last shot’, the court decided in this case that the ‘first shot’ (Panasonic’s) had won. This was on the basis that TRW had agreed Panasonic’s terms and conditions by signing a document stating this, before it sent its own terms and conditions.


This case highlights the importance of taking care when doing business on a ‘standard terms and conditions’ basis. This is because it is possible for one party to word its standard terms and conditions in a way that will help it to win any ‘battle of the forms’ argument that may arise in the future. Many parties often assume that just because it fired ‘the last shot’, it will always succeed in persuading a court that the contract was formed on its terms and conditions. TRW v Panasonic reminds us that this is not always the case.


Glossary

to purport – to have the appearance of being, or doing something, when it may not be the case.

to grind to a halt – to stop working or functioning.

defective – imperfect or faulty. If something is wrong with goods, we say they are ‘defective goods’.

jurisdiction – an official power, for example, to make legal decisions and give legal judgments about something. If you do not have jurisdiction to do something, it means you do not have the legal power or authority to do it.


[1] https://www.bailii.org/ew/cases/EWHC/TCC/2021/19.html


EXERCISE

Complete the following sentences with an appropriate word or phrase from the Commentary.

1. We offer to sell you 20,000 resistors on the basis of our standard ………… ……. …………………………………. , a copy of which are enclosed with this letter.


2. If we cannot agree on the price, I feel that our negotiations are going to …………………. …… …. ………….


3. Offer, acceptance, consideration, and an intention to create legal relations are the essential elements require to form a ……………………. ………………….. contract under English law.


4. When the goods arrived, we looked at them and it was obvious that they were …………………………………… ; they were completely wet and unable to be used or sold.


5. TRW v Panasonic is a case which highlights that in a …………………. ………. ……… ……………… scenario, the last shot does not always win.




ANSWER KEY

1. terms and conditions

2. grind to a halt

3. legally binding

4. defective

5. battle of the forms



NOTE: This post is intended to be study and educational material only. It is not intended, in any way, to be legal advice. If you need legal advice, you should always consult an appropriate lawyer.



© Cambridge Legal English Academy 2021

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