When a battle of the forms isn’t a battle at all

A battle of the forms sometimes comes up in disputes as to the terms for supply of goods, including in construction disputes where a contractor orders materials from a supplier.

The battle arises when the supplier and the customer/contractor look to contract on the basis of their own terms. It is often argued to be won by the party that fired the "last shot" i.e. the last party to put forward terms that were not explicitly rejected by the other.

However, as the recent judgment in Caledonia Water Alliance v Electrosteel Castings (UK) Ltd shows, a last shot argument will not necessarily succeed and the case is interesting for it’s guidance on how battle of the forms situations should be analysed.

The judgment involved a dispute about whether the Scottish or English Courts had jurisdiction, which turned on deciding which terms applied to the parties’ relationship, taking in arguments as to battle of the forms.

In this case:

• CWA issued sixty purchase orders for ductile iron pipe from Electrosteel for use in a water project. In each case, the CWA purchase orders were followed by an order confirmation from Electrosteel with its standard terms.
• CWA said that the numerous contracts formed between it and Electrosteel were each a project order (in terms of the Alliance Agreement that CWA had with Scottish Water), calling off work for this project from Electrosteel in terms of its position as a supplier under a related Scottish Water Framework Agreement. As such, CWA argued that (i) the contracts were subject to the Scottish Water terms for the purchase of goods and services under that Framework Agreement and (ii) they gave the Scottish Courts jurisdiction.
• Electrosteel’s points included a battle of the forms argument, as it said the various contracts were regulated by its terms, which were referred to in each order confirmation that was sent last and they gave the English Courts jurisdiction.

In respect of case law referred to in the course of battle of the forms arguments, CWA said that in each case an objective consideration of all the circumstances was required. It may therefore be that the “last shot” wouldn’t necessarily be successful, analysed on an offer and acceptance basis, in imposing standard terms. The Court essentially agreed with that approach, setting out in the judgment:

• “Both parties were agreed that, in dealing with so-called “battle of the forms” cases, the correct approach was that which had been adopted by the English Court of Appeal in Tekdata and which had been subsequently followed by Lord Malcolm in Specialist Insulation and, again by the Court of Appeal, in TRW Limited. From these cases, I consider one can derive three propositions.
• First, in this type of case in which there would appear to be a conflict between the parties’ intentions, it is all the more important to approach the question of what the parties intended objectively.
• Second, the general rule is that a traditional offer and acceptance analysis, which often results in the “last shot” determining the outcome, is to be applied in this type of case. Such an approach has the significant benefit of providing a degree of certainty which is both desirable and necessary in order to promote effective commercial relationships.
• Third, however, it is clear that where either there is express agreement between the parties or such an agreement can be inferred, it may be concluded that the parties intended to ignore the standard terms and conditions they had exchanged”.

Applying those propositions, the Court found – on the evidence before it in respect of this case – that prior to any orders being placed by CWA with Electrosteel, the parties had a common understanding that their relationship was to be governed under and in terms of the Scottish Water framework including Scottish Water’s Standard Terms.

The Court went on to find that, in the circumstances here, the parties intended that the references by each of them to their own standard terms in the documentation exchanged between them were to be ignored. This was based on:

that common understanding above;

• neither party having set out any intention to change the basis upon which the orders were to be dealt away from what was set out in the Scottish Water framework;
• what the Court referred to as “the striking silence”, instead of questioning why standard terms were being referred to when the order documentation was being exchanged; and
• the evidence as to what the parties, particularly Electrosteel, did after the formation of the contracts by acting in ways consistent with the Scottish Water framework agreement applying.

This judgment serves as a useful summary of the approach the courts are likely to take, where there is a battle of the forms dispute as to what terms apply. I.e. starting with considering what the parties intended objectively; generally carrying out an offer and acceptance analysis (where the “last shot” may well, but not always, determine the outcome); but always considering any express agreement between the parties. It is also a sharp reminder that parties will best protect themselves by fully understanding what terms they are contracting on and recording the position clearly.

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