November 2011: Commercial Department Bulletin

Most businesses prefer to enter into contracts based upon their own standard terms of business. However in a business-to-business agreement this causes obvious difficulties. It can be hard to decide (a) exactly whose standard conditions have prevailed (if any) and therefore (b) what the terms of the contract actually are.

Traditionally the Courts have applied the ‘last shot wins’ doctrine, whereby the last set of terms sent before an act of performance of the contract will be deemed to be the terms of the contract. However, that will not apply if there is clear evidence of a contrary intention. Sometimes the Courts have even decided that neither party’s standard conditions will apply. This can leave businesses uncertain as to what their agreement actually is. Here are a few ways to avoid and limit the consequences of the ‘battle of the forms’:

(1)    Negotiate, negotiate, negotiate
Standard conditions are traditionally used in place of negotiated terms in order to save time and money. However it might prove more cost effective and less time consuming in the long run to negotiate terms (even if just particularly contentious ones) rather than to be uncertain as to what terms apply and then have to embark upon litigation. Arguably negotiation is also a better way to ensure long term business relations as (hopefully) the parties will reach a compromise that suits them both.

(2)    Communicate, communicate, communicate
Sometimes businesses are fearful of communicating their concerns to the other contracting party. They simply ignore their concerns and hope that the worst never happens. This kind of planning (or lack of it) is sure to lead to problems for businesses. If you have an issue about a contracting party’s standard conditions, tell them what it is - with any luck a fruitful discussion might ensue which pleases both parties.

(3)    Actions speak louder than words
All contracting parties should be aware that, by starting performance of a contract, they may inadvertently have accepted the other side’s standard terms. This can cause a major headache should a dispute arise.

(4)    Keep firing those shots
If you really cannot bear to conclude the contract on the other side’s terms, you need to work at making sure your standard terms are the final terms of the contract. List your standard terms on as many of the pre-contractual documents as possible and make sure that all staff are trained to know that what they say and any documents they send can make a real difference to the terms of the eventual contract. The final shot wins is still good law but it can be a risky strategy as you cannot be certain what exactly the Court will consider to be the last shot.

(5)    The Prevail Clause
A “prevail clause” (which states that, in the case of uncertainty, your terms will prevail) has relatively limited value as if, because of the way the contract came to be concluded, your standard terms are not accepted, then neither will your “prevail clause” be. However they might have ‘bluff value’ making the other side less likely to dispute your standard terms should a problem arise.

(6)    Record and Preserve
As far as possible all contractual negotiations should be recorded and then kept so that if a dispute should arise you will have evidence to show that your standard terms were the ones agreed upon (assuming of course, that they were).

Often when making contracts businesses don’t consider the possibility that a dispute might arise. However problems can and do occur. If a disagreement does arise it is imperative to take legal advice at the earliest opportunity. It is better to deal with problems as they occur than to delay and then have to embark on full blown litigation which can be costly and time consuming. Perhaps most importantly, early legal intervention could help to preserve a valuable long term business relationship between yourselves and your contractual partner.


This bulletin is not intended to be comprehensive or to provide specific legal advice. It should not be relied upon in the absence of specific advice given in relation to particular circumstances.

For further information on this or any related topic please contact Philip Cuerden or Carina Pennant-Williams.

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South Cheshire House, Manor Road, Nantwich, CW5 5LX
Tel: 01270 611106 Fax: 01270 610515 or 610085
www.bowcockcuerden.co.uk

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