I often receive questions relating to the Battle of the Forms. In this age of e-contracting, one might assume that this issue is no longer relevant.
However, companies still send their RFP’s, Quotes, POs, Acknowledgements and other forms which include their own terms and conditions, even if they do so electronically.
Unless both the buyer and seller sign (or click their assent to) a single agreement under which they agree to do business, the parties will be operating in the uncertain realm of the Battle of the Forms.
Below are some basic guidelines and suggestions in “fighting” and “winning” the battle for both the buyer and seller.
BASIC GUIDELINES
1. Include your Terms and Conditions with your form.
If you don’t provide the other side with your terms and conditions (of either purchase or sale), you are not engaging in the Battle of the Forms…..and you will lose. That is to say, you may have inadvertently agreed to the other side’s terms even if you never signed their form. Make sure you include your terms with your form.
- Practice Tip: You don’t have to include the terms with every form. Consider posting your terms on your website and make reference on the face of your form to the URL on which those terms are posted.
2. Don’t sign the other company’s form.
If you sign the other side’s form, you will have lost the battle….even if you provide the other side with your terms.
3. Include the UCC “knockout language.”
A key clause to include in your terms is one which objects to all terms in the other side’s form that differ from or are in addition to your terms. (See example language in Question 2 contained in “Battle of the Forms FAQ’s” blog in this newsletter.)
4. Bad news for Sellers.
Sellers will almost always lose the battle regarding limitations of liabilities and warranties if the customer provides the seller with its terms of purchase. As a seller, the only effective way to limit your liabilities with your customer is to negotiate and sign a master agreement which includes a Limitation of Liabilities clause. While that’s not encouraging, see item 5 to minimize these risks.
5. Two important approaches in “fighting” the battle.
While you should be familiar with the guidelines in fighting the “battle of the forms”, the most productive and efficient use of time is to focus on the major issues and ensure agreement in those areas.
Practice Tips:
- Resolve discrepancies on the front of the forms. For example, if the seller’s quote calls for net 30 day payment terms but the buyer’s PO states net 60 days, you know you’re headed for problems on the 31st day unless you resolve this difference up front.
- Other common discrepancies occurring on the face of the forms:
- Are there conflicts in the description of the product/ service?
- Are there ambiguities?
- Are the delivery dates and terms in agreement?
- Are the progress milestones clearly defined and consistent between documents?
- Discuss and agree upon the most significant issues
- Example: Warranty: So, maybe you don’t understand the nuances of the warranty clause, but you should at least discuss the start date of the warranty, its length, and what is covered/ not covered. NOTE: If you come to my seminars, you will certainly leave with much more understanding of how to understand and negotiate the warranty clause!
BOTTOM LINE:
The most effective approach in avoiding a legal dispute is to address and document the key transactional issues at the initial contract stage.