In the case of Tekdata Interconnections Ltd v Amphenol Ltd, in which East Midlands' law firm Nelsons acted for Tekdata, the Court of Appeal considered the question of whether there could be circumstances in which a traditional offer and acceptance analysis could be displaced by reference to the conduct of the parties over a long-term relationship.
A commercial litigation partner at East Midlands' law firm Nelsons, Stewart Vandermark says: "In commercial transactions, it is not uncommon for A (the seller) to make an offer on his standard terms and for B (the buyer of the goods) to then accept A's offer on B's terms. If you were to apply the traditional analysis as to the formation of an agreement, you would conclude that B's offer would amount to a counter offer and therefore an agreement had not formed. However, if A accepts B's counter offer by, for example, delivering the goods after B had accepted A's offer on his own terms then B's terms will apply. The law will conclude in this 'battle of the forms' that B fired the 'last shot' in the formation of the contract and therefore his terms prevail."
According to Mr Vandermark, in the Tekdata case, his client purchased connectors from Amphenol as part of a supply chain to Rolls Royce for use in aero engines. A dispute then arose when Tekdata claimed that the connectors were defective. Tekdata argued that the contract for the purchase of the connectors had been concluded on its terms, while Amphenol contended that its terms prevailed.
"We argued that even though, on the facts, the last act in the formation of the contract was that Amphenol had acknowledged a purchase order and delivered the goods with its terms, the trading history between the two parties - which spanned more than 20 years - showed that both parties intended Tekdata's terms to apply," says Mr Vandermark. "Having analysed various factors relating to the overall relationship between the parties, the courts agreed. The Court of Appeal however, held that the traditional 'battle of the forms' analysis must be adopted unless the documents passing between the parties and their conduct strongly showed that their common intention was that some other terms were intended to prevail."
He continues: "Lord Justice Longmore argued that in ascertaining whose terms and conditions applied, the judge had concentrated more on what would have happened historically in the trading relationship between the parties considering what actually happened between them in this circumstance. He also found that too much emphasis had been placed on the correspondence which passed between the parties after the dispute had arisen and held that any documents created after a dispute arises should not be relied upon by a party in arguing that its terms and conditions apply."
In conclusion, Mr Vandermark says: "If there was ever a case where there could be circumstances in which a traditional offer and acceptance analysis could be displaced by reference to the conduct of the parties over a long-term relationship, then this would be it. If this case isn't the rare one to fall within the exception which the Court of Appeal has confirmed is 'conceptually possible', then we have to assume that the courts will be extremely reluctant to displace the traditional approach to contract formation and that the battle of forms will be strictly applied.
"Commercial parties, especially those which maintain long trading histories, should therefore take great care to negotiate whose terms are to apply to a given commercial transaction. It would be sensible for businesses to review and revise contract forms as it will not suffice for one party to simply include a term in its contract which states that its terms and conditions will prevail."