Often seen, rarely read, they pass back and forth between buyers and sellers: unsigned form contracts for the sale of goods (a.k.a. standard terms and conditions or T&Cs). The terms and conditions can be part of requests for quotes, quotes, purchase orders, order acknowledgments, shipping documents, invoices, or all of the above.
When a conflict arises between a buyer and seller, which standard terms and conditions are going to apply? That depends on the outcome of the BATTLE OF THE FORMS.
Sounds pretty exciting, right? Despite the catchphrase, we’re talking about the bone-dry, statutory method courts use to determine the terms that will apply when parties have exchanged form contracts.1
The battle of the forms generally applies the following rules:
- Terms that are the same will apply.
- Additional terms will also apply, unless
- the offer expressly limited acceptance,
- the additional terms materially alter the contract, or
- an objection to additional terms has already been given.
- Different terms will not be part of the contract.
Courts consider a term to be an additional term if the other party’s terms do not address the issue. For example, if your terms are silent regarding dispute resolution, but the other party’s terms provide that arbitration will be used to resolve all disputes, the arbitration provision would be considered an additional term.
Courts consider a term different if both documents address an issue, but differently. For example, if your terms state that all disputes will be resolved in state court and the other party’s state disputes will be resolved through arbitration, the dispute resolution term would likely be considered different. The court would proceed as though there was no provision in the contract related to dispute resolution.
When there is a battle of the forms, it is best to be the party providing the initial offer. Strategies to put you in the best position include the following:
- Actually have your own terms and conditions. It is easy to customize terms to fit your business’s needs. If you have no standard terms and conditions, there may be no contract to enforce when a dispute arises or you may have accepted the other party’s terms to your detriment. Horror stories abound. Get your own customized terms.
- Include your terms and conditions early and often. Buyer’s terms will typically be considered the offer. The timing of the offer depends on when the other party can accept by saying “yes.” The terms deemed the offer also have the benefit of being able to expressly limit acceptance. Incorporating your terms and conditions early enhances your chance of them being considered an offer.
- Expressly limit acceptance of your terms and conditions. Because it is not clear what will be considered the offer, both parties should include language in their terms to limit acceptance.
What if your relationship is significant enough that you do not want to deal with the uncertainty of the battle of the forms? Strongly consider entering into a signed contract that could avoid the statutory scheme altogether and potentially costly disputes.
If you are interested in considering further key factors in terms and conditions, see our downloadable form here. The form includes annotations and highlights areas of particular interest related to terms of sale.
1 Wis. Stat. § 402.207 (2019-20)