Navigating the Standard Terms minefield

At the heart of this question lies two of the most fundamental and elementary principles of contract law, namely the principles of ‘offer’ and ‘acceptance’. Oliver Jackson, a solicitor with Surrey UK based Mundays LLP, provides MJ’s readers with a condensed guide through the minefield with his Top Ten Tips.

Sellers should seek to ensure that their standard terms are brought to the attention of customers at the earliest opportunity. It is preferable, however, that the offer is made by the buyer as the seller will then know whether and when a contract has been entered into. The seller can, for example, supply buyers with a standard order form incorporating the seller’s terms.

One party will make its ‘offer’ by providing its standard terms to the other. These terms are ‘accepted’ by the other party signing them. Terms can also be incorporated into a contract by conduct (i.e. by performance of the contract) or as a result of a ‘course of dealing’ (considered below).

Remember, in contract for the supply of goods, a seller, believing it is contracting on its own standard terms, can be at risk right up to the time of the delivery of goods.

Whilst the basic contractual principles of ‘offer’, ‘acceptance’ and ‘performance’ seem straightforward enough, the case law in this area shows that the actions of the parties can easily create a confusing picture.

If you wish your standard terms to be the terms which prevail in a contract, you should ensure that reasonable steps are taken to bring them to the attention of the person with whom you are contracting prior to the performance of the contract.

You then need to be vigilant in ensuring that your terms are not subsequently trumped by any competing terms which your opposite number may wish to introduce.

If you are in a long standing trading relationship with another party then you may be able to argue that a course of dealing has been established on a given set of terms. This, however, cannot be relied upon and it is always safer to consider entering into a master agreement

Sellers should be careful to ensure that any proposals put forward for a contract are phrased so as not to constitute an offer, otherwise a buyer’s acceptance could form a contract before the seller’s standard terms have been incorporated.

A seller’s standard terms will often contain a clause providing that any purported acceptance by a buyer will only take effect as an offer on the seller’s standard terms and that no contract will be created until the seller issues its confirmation of the order.

If your standard terms are on the back of any contractual document, you should ensure that you make express reference to them, or to your trade association terms, on the face of the document.