Contract Law: Battle of the Forms

This is the third in a series of articles on contract law. The previous two have looked at the rules regarding offer and acceptance, this short note considers some of the problems associated with offer and acceptance.

In the modern day business world many contracts are no longer simple offer then acceptance contracts, instead there are large amounts of negotiation before a final agreement is reached. One major problem is what is known as the battle of the forms, basically it is very common for businesses nowadays to have their own standard forms (or contracts). This of course has a number of advantages and in a traditional business to consumer sale is quite straightforward, but where the agreement is between two businesses the situation may occur where the offer is made on the offeror’s standard form yet the acceptance is made on the offeree’s standard form. The question thus arises as to which terms are applicable (see Davies & Co Ltd v William Old [1969] 67 LGR 395),

The main case for this point is that of British Steel Corporation v Cleveland Bridge and Engineering Co [1984] 1 ALL ER 504 in which a major term (excluding liability for late delivery of a product) was never agreed yet the work itself was completed. In this case the court decided that no contract was made but the items in question were nonetheless paid for. This is seemingly not a satisfactory decision and as such Lord Denning (amongst others) have suggested alternative approaches: “The terms and conditions of both parties are to be constructed together. If they can be reconciled so as to give harmonious result, all well and good. If the differences are irreconcilable, so that they are mutually contradictory, then the conflicting terms may have to be scrapped and replaced by a reasonable implication.”.

Seemingly if the terms in dispute are not central to the major purpose of the contract then they can be ignored in determining the existence of a contract and would thus be unenforceable provided that the main terms are harmonious. (See Walford v Miles [1992] 2 AC 128 & Pagnan SpA v Feed Products Ltd [1987] 2 Lloyd’s Rep 601).

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