24 March 2015

The recent case of Transformers & Rectifiers v Needs had to look at whose terms applied. For more than 20 years the parties did business with each other on a weekly basis, ordering and supplying nitrile gaskets. Two orders were placed and the parties ended up in a dispute over whether what was supplied was in breach of contract and not suitable for their purpose. The question was whose terms applied and whether the supplier could rely on its exclusion clause to limit its liability. In the “battle of the forms”, the claimant buyer argued that their terms applied.

The problem the claimant had was that they did not place their orders in a consistent way, sometimes they were sent by post, sometimes by fax or email, sometimes there was a phone conversation and sometimes not. The Judge made it clear that if a buyer wants to incorporate his standard terms and conditions when orders are sent by fax or email, they must give the seller reasonable notice of them and in circumstances that make it clear they intend to rely on them. That means that if the terms and conditions are on the reverse of the purchase order, they should be referred to on the front and faxed or included as a pdf attachment to the email. The claimant did not do that consistently and was not entitled to rely on his terms and conditions.

However, the seller was not entitled to rely on his terms and conditions either. They did not send the buyer a copy of their terms and conditions at the outset (or at any point in the course of dealing) making it clear that they were the only terms on which they were prepared to do business. Nor, when they acknowledged orders, did they refer to their terms.

Neither party won the battle and neither of their sets of terms and conditions were incorporated into the supply contract.

Key contact

Helen Scott-Lawler

Helen Scott-Lawler Partner

  • Head of Food and Drink
  • Commercial
  • Intellectual Property and Media

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