Whose terms apply?

Whose terms Apply?

The age old question in construction disputes of whose terms apply is still a surprisingly common problem and raised its’ head again in Transformers & Rectifiers Ltd v Needs Ltd [2015] EWHC 269.

Here there was an argument between parties who had carried out business with each other for a number of years. The purchase order used had the purchaser’s terms on the back of the form but did not refer to them on the front. When placing orders by email the purchaser did not send a copy of the terms. To make the problem worse compound the supplier’s acknowledgement, although referring to its’ terms and conditions, did not supply a copy of the terms but advised a copy of those terms was available on request – but it did not supply them. Inevitably the question arose as to whose terms applied.

The judge said that a purchaser wishing to incorporate their terms and conditions in orders sent by e-mail must give the supplier reasonable notice of them and that they intended to rely on them. To ensure this and because the front page of the purchase order did not refer to the terms on the back it would be necessary to e-mail a pdf attachment including the face of the purchase order and the terms on the back. In this case the purchaser had not done so and accordingly failed to incorporate its terms into the contract.

However the Judge also said that a supplier who wanted to incorporate their own terms by referring to them in an acknowledgement must refer to them on the face of the acknowledgement, making it obvious those terms were to govern the contract. Unless referring to standard terms the supplier ought to give the purchaser reasonable notice of their terms – printing them on the back of the acknowledgement or by sending a copy to the purchaser. In this case the supplier had not done so.

The consequence in this case was that as both parties had failed to take these actions neither party’s terms applied.