Commercial terms and conditions will only be effective and enforceable if they are incorporated into the contract for sale or supply.
If terms and conditions have been expressly agreed and signed off by both parties prior to contract formation, then it is highly likely that the terms will have been incorporated in the contract and therefore will be legally binding and enforceable.
However, it is common for terms and conditions not to be formally agreed by the parties, and therefore the burden will be on the owner of the standard terms to establish that their terms have been incorporated into the contract.
A potentially effective way to incorporate your commercial terms is to state expressly in pre-contract communications that your business’s terms and conditions will exclusively apply to, and govern the sale. Providing you disclose your terms at this time, and they are not challenged by the other party, then your terms should be incorporated into the contract.
An alternative but higher risk option is merely to bring standard terms to the attention of the other party at the earliest opportunity in as much of your pre-contract and contract documentation as possible. For a supplier, this would include setting out or making an express reference to its standard terms in brochures, catalogues, on quotations, on purchase order forms, on the acknowledgement or confirmation of purchase order forms and on websites. You should consider taking legal advice from a commercial solicitor as to the most effective way of incorporating your terms.
It should be noted that making express reference to terms and conditions on invoices including printing standard terms on the back of an invoice will generally be ineffective for the purpose of incorporating the terms in the contract. This is because the invoice will usually be issued after contract formation. However, referencing terms on invoices may help the supplier to argue that the terms had been brought to the attention of the customer over a period of time, where there has been a course of dealing, and therefore are incorporated into the contract.
The supplier should also ensure that:
1. Where commercial terms and conditions are printed on the reverse of a document, the document should clearly state on the front page that the sale or purchase is subject to the terms printed on the reverse and that they form part of the contract between the parties.
2. If a term in the terms and conditions is unusual or onerous, such as an exclusion of liability clause, then the other party’s attention must be drawn to it on the face of the document, since the courts require special notice to be given of any such terms.
You should note that where there is no express incorporation of commercial terms and conditions then incorporation may be subject to the battle of the forms. This occurs where each party references their own terms and conditions in return communications relating to the sale or supply. The question in this case is which set of terms and conditions should prevail and govern the contract, if any? In such instances the courts will try to determine whether there has been an offer that has been unequivocally accepted. Usually, the last communication exchanged by the parties that was not explicitly rejected by the recipient (ie by the recipient responding with their T&Cs) will be held to constitute the offer.
Summerfield Browne Solicitors have offices in London, Birmingham, Oxford, Cambridge, Northampton and Market Harborough, Leicester.
