Andrew Ryan – Partner and Head of Dispute Resolution: “The last shot fired may not hit the target”

A (so-called) “battle of the forms” arises where two parties enter into negotiations with the intention of entering into a contract and each party attempts to conclude the contract on their own standard terms and conditions.

The scenario often arises in negotiations between commercial suppliers and buyers of goods.

In every case, in order to determine which parties terms and conditions apply, you need to analyse the exchanges between the parties and determine when the contract was formed.

Often, the “last shot” doctrine applies: the terms and conditions which prevail to govern the parties’ rights and obligations under the contract are generally those which were sent last and received without objection.

The recent decision in TRW v Panasonic is an interesting example of a case where the “last shot” doctrine did not apply.

In that case, Panasonic sought to rely on their “customer file” (signed by a representative of TRW) which contained an acknowledgment that TRW had received Panasonic’s general conditions. The general conditions expressly provided that any dealings between the parties would be governed exclusively by Panasonic’s standard terms and conditions and would be subject to German law. The terms further excluded any contrary conditions of the buyer not expressly agreed to in writing by Panasonic.  TRW claimed that those terms and conditions did not relate to the contracts in dispute and claimed that their own terms and conditions were incorporated into the contract by way of the purchase orders. TRW therefore relied on the “last shot” doctrine. TRW argued that Panasonic had agreed to the terms and conditions when they effected delivery of the goods, notwithstanding the fact Panasonic had not been required to sign them.

The court found that the contract was governed by the terms and conditions referenced in Panasonic’s “customer file”. The customer file, whilst not creating any obligation on the parties to buy or sell Panasonic products, did ensure that any future trade would be governed by Panasonic’s standard terms unless Panasonic agreed different terms in writing.

The court held that Panasonic had protected itself from the “last shot” doctrine by incorporating a provision stating, “conditions of the buyer diverging from our terms and conditions shall not be valid even if we effected delivery”. The court said that the only way TRW could have incorporated their terms into the contract, would have been to have Panasonic agree to them in writing prior to purchasing the goods. It found that “[TRW’s] last shot missed the target”.

Does all of this really matter? Each case is dependent on its own particular facts. The Panasonic case, however, shows the potential benefit of treating the above matters seriously. The English court found that the claim by TRW had to be dealt with under German Law by the Germany court.  It mattered to TRW…

If you would like further information or would like to discuss a potential issue that you are facing, please contact me here. You can also read more about our  business dispute resolution services here.

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