Jan 20

Ensuring the effective incorporation of a business’ terms & conditions

Written by Jennifer Watson
Associate

DDI: 01423 726618
E: jennifer.watson@raworths.co.uk

It frequently comes as a surprise to businesses who have put time and effort into creating a set of terms and conditions (T&C’s) to regulate their relationships with customers and suppliers, that these T&C’s have not been effectively incorporated into their contracts.

Generally speaking a contract is formed when an offer made by one party (Party A) is accepted by another (Party B), either expressly with words or deemed accepted by their actions, for example by Party B fulfilling their obligations under the contract.

Where there is only Party A’s terms and conditions, for example because Party B is a very small business or an individual consumer, the position is relatively simple:

• Party A makes an offer which incorporates its standard T&C’s
• Party B accepts the offer and the resulting contract is governed by Party A’s terms

The position becomes a lot more complicated when both parties have their own competing terms and conditions. This “battle of the forms” often occurs when:

• Party A makes an offer which incorporates its standard T&C’s
• Party B accepts the offer, but with a reference to its own conflicting terms

We are now faced with a number of questions. Has a contract been formed, given that Party B altered the terms with their acceptance? If so, whose T&C’s have been incorporated into the resulting contract? Or have any terms been incorporated at all?

The solution

Unfortunately, the solution to this depends on the individual facts and circumstances of each situation. There is no single route to be followed (without both parties signing the same contract) to guarantee that a contract will be formed incorporating a particular set of terms when both parties are trying to use their own standard T&C’s.

However, there are a number of practical and operational measures for a business to consider that could turn the battle in their favour:

1. Where are your T&C’s mentioned? It is not enough to refer to your standard terms and conditions in a small footnote at the bottom of an email. In the case of a true “battle of the forms”, you would need to be able to prove to a court that your T&C’s had clearly been brought to the attention of your customer or supplier.
2. When are your T&C’s mentioned? Although it is pretty standard for terms to be printed on the back of an invoice, this alone may not incorporate your T&C’s into a contract with a customer, simply because an invoice is not normally despatched to a customer until after the contract has been entered into.
3. Whose offer documents are being used? When negotiating, if possible the “offer” should be made using a document which incorporates your standard T&C’s. For example, customers should use your order form and you should deal with suppliers using your standard purchase order. It can also be useful to improve adherence to any internal policies as to the use of your own terms and conditions and to ensure that staff understand why such a strategy is so important.

For further advice on what steps a business can take to maximise the chances of successfully incorporating its standard T&C’s into contracts with customers and suppliers, please contact the Corporate / Commercial team at Raworths on 01423 566 666 or contact Jennifer on jennifer.watson@raworths.co.uk

Published on 23 January 2020