In commercial negotiations, both parties often attempt to rely on their own standard terms and conditions (“T&Cs”) as forming the basis for a contract. This to-ing and fro-ing over the incorporation of T&Cs between supplier and customer is known as the “battle of the forms”.
It has been a long held principle that the battle of the forms is usually determined by the “last shot” – i.e. a contract is formed on the basis of the last set of T&Cs put forward by one party or the other.
However, in the recent case of TRW Ltd v Panasonic Industry Europe GmbH & another [2021] , there was a timely reminder to not assume the application of a general rule in these cases.
The upshot of this case is that where a clause was used in one parties T&Cs that excluded future T&Cs from taking precedence, this was held to be valid and prevent the other parties set from prevailing. The big risk here of course, is that if both parties take this approach in their T&Cs, there is a real risk that no contract will be formed at all!
However this does give food for thought about the key areas that should be in any set of T&Cs. The important take away here is to be able to make sure that these reflect your business rather than be standardised.
Terms needs to be tailored to your market (whether business to business or business to consumer), the types of services/goods/software and where they are being supplied. It is always amazing how many sets of standardised non-bespoke T&Cs have so little protection in them in terms of limitation of liability.
Below are some key provisions which we recommend be included regardless of the type of product or target audience. They are not intended to be anywhere near all of the areas to be considered but give a starting point for some of the key areas.
How those terms are presented may however look very different depending on who you are supplying to and what you are supplying. Any business needs to understand its own risk appetite in this area and what the liabilities and obligations of their business are under the agreement.
Do you have the following areas covered?
- Price and payment – This should cover not just the price but what happens in the event of late/non-payment, interest and in some cases changes in supply chain allowing the supplier to pull out if on-costs rise beyond an agreed amount.
- Term & termination – When does the agreement start, how long does it run for and are there any ancillary rights to terminate/extend it? What grounds are there to bring it to an end early and who has them?
- Data Protection – Is the data to pass between the parties identified and is are the T&Cs compliant with GDPR?
- Intellectual property (IP) rights – What IP might be created in the contract, who will own it and who else would have the rights to use it and on what terms?
- Limitation of liability – What provisions are there to limit the liability (whether by way of a cap or specific exclusions etc) and are they actually enforceable given the various legal constraints, whether dealing with consumers of other businesses?
In conclusion, any T&Cs need to be both clear and certain as to what has been agreed – the aim here is to minimise the risk of any disputes or misunderstanding as to what was agreed.
Please drop us an e mail or call if you need any further details or assistance and stay safe and well.
Roger
