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Contract talks: How to avoid the ‘battle of the forms’

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TERMS and conditions are legal contracts that govern the use of a service or product. They establish the terms of the relationship between the parties and mitigate against potential disputes.

Terms and conditions are important to outline the rules and regulations around the use of a service or product writes Flora Patalane, solicitor in the corporate services department at Franklins Solicitors.

Flora Patalane.

Businesses often put themselves at risk by not specifying that the terms form part of the contract. The enforceability of terms and conditions is regularly misunderstood, and they are not automatically legally binding. The success of a transaction depends on the agreements between parties. The content of these agreements will be subject to negotiation, which can give rise to the “battle of the forms”.

The importance of incorporation

Effectively incorporating a business’s terms and conditions into a contract is therefore necessary to ensure that a transaction will be successful. It is all the more important to incorporate terms and conditions into a contract as it provides a certain clarity and certainty in relation to the rights and obligations of the parties involved. With clear terms and conditions in a contract, there is less room for disputes.

When it comes to express and implied terms, incorporating terms and conditions allows parties to specify their goal. By doing so, the parties’ reliance on implied terms will be reduced.

Battle of the Forms

The battle of the forms will occur when two or more parties are looking to make a contract, and each party attempts to incorporate its own terms and conditions. The issue will be to determine which terms and conditions will govern the contract.

There are four different outcomes, depending on the circumstances:

  • Last terms sent apply, which means that the last set of terms that was sent before acceptance or performance will apply. This is often referred to as the “last shot”.
  • When other terms apply, however, this means that the parties’ conduct together with documents passing between them only shows that other terms will prevail.
  • No other terms will apply if neither party’s terms and conditions are incorporated.
  • There will unfortunately be no contract if the parties cannot agree on the terms. Therefore, if something goes wrong, they will have to rely on the law of restitution for a remedy.

Offer and Acceptance

When incorporating terms and conditions, parties essentially apply the principles of offer and acceptance. In exchanging the forms, parties are making offers and the terms which are accepted will form the binding contract. It is therefore crucial to have clearly drafted terms and conditions as the parties will be relying on them throughout the life of the contract.

Incorporating terms and conditions into contracts promotes clarity and provides certainty to the parties which is crucial to business relationships. This allows for the parties to be bound by the terms of the contract. This is a way to reinforce the contractual relationship. It is therefore important to clearly define the terms for the parties to establish some sort of legal certainty which is required when entering into a business relationship.

The commercial team at Franklins Solicitors has a wide range of experience when it comes to drafting terms and conditions, as well as advising on incorporation techniques, and will be happy to assist your business with this process. Visit www.franklins-sols.co.uk to find out more.

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