Battle of the forms – last shot does not always prevail

“Battle of the forms” refers to a contractual dispute where both parties allege that their terms and conditions govern the performance of the contract, over and above the other party’s terms.

The general position is that the party who sends their terms and conditions last before performance of the contract wins the battle of the forms, meaning that their terms prevail. However, the recent Court of Appeal decision in TRW & Limited v Panasonic Industry Europe GmbH and another company [2021] EWHC 19 (TCC) has shown that in some circumstances, the first shot prevails.

Background

TRW signed Panasonic’s customer file, which stated that they had received and acknowledged Panasonic’s standards terms. Those terms gave the German Court of Hamburg exclusive jurisdiction over any dispute arising under the contract. Panasonic’s terms also contained a provision that no conflicting term put forward by the buyer’s terms would be deemed to be accepted unless Panasonic agreed to the term in writing.

A dispute arose between TRW and Panasonic relating to TRW’s purchase of alleged defective resistors. TRW sought to rely on their standard terms which were enclosed with the purchase orders, and under the last shot doctrine, prevailed over Panasonic’s terms. The effect of this was that the English courts had jurisdiction.

Decision

The Court of Appeal departed from the usual position that the last shot prevails. Even though Panasonic’s terms were sent first, the Court of Appeal held that those terms prevailed and therefore the German courts had jurisdiction over the dispute. The Panasonic customer file was held to be an overarching master contract and TRW’s signature was acceptance of the terms.

The Court confirmed that if it was TRW’s wish for its terms to prevail, they should have either not purchased from Panasonic at all or obtained Panasonic’s written agreement in line with their terms.

Practical implications

This case should come as a warning to buyers that their terms may not be accepted by the Court, even where they have been sent last in the contractual negotiations. This case highlights that careful drafting of standard terms can prevent subsequent conflicting terms from applying and can secure acceptance of those terms from the outset.

This decision also makes it clear that acceptance at the outset to a party’s terms and conditions which applies to all future transactions is supported by consideration even without a purchase under the contract, similar to the operation of a framework agreement.