Transformers & Rectifiers Limited v Needs Limited  EWHC 269 (TCC)
The parties had been trading with each other for several years and had enjoyed a good commercial relationship, but had never thrashed out whose standard terms of business governed their dealing. One party wanted to assert high levels of liability the other party wanted to limit liability. Eventually a dispute arose, where each party wanted to rely upon its own terms and conditions.
Transformers and Rectifiers Limited (TRL) would submit Purchase Orders to Needs Limited (NL) which had its terms and conditions printed on the reverse side of the order. There was no reference on the face of the purchase order that there was anything printed on the back. Therefore, the only way a supplier would be aware of the existence of the terms and conditions was if they happened by chance to turn the document over. Furthermore, many of their orders were placed by fax or e-mail in which case only the front page of the purchase order would be delivered. However NL accepted that it was aware of the existence of TRL’s terms and conditions.
Upon receipt of the purchase order, NL would issue its own acknowledgement of order which referred to their terms and conditions but did not include a copy of them. Nor did NL provide a copy of the terms and conditions.
The Court held that neither party’s terms and conditions has been incorporated into the relevant agreements.
TRL had failed to follow a consistent practice of enclosing their terms and conditions with every purchase order, nor did they refer to their existence on the front of the document, therefore, NL was entitled to assume that TRL did not intend to rely upon them.
As NL had made no attempt to provide TRL with its own terms and conditions, then, in the Court’s opinion, they did not do enough to being them to TRL’s attention and therefore, they were not in position to rely upon them.
The Court did state, however, that the position may have been different if the terms and conditions the party’s were seeking to impose were industry standard. In which case, it may be reasonable to assume that the other party would be aware of their existence.
This is a typical ‘battle for the forms’ scenario where differing terms and conditions are sent back and forth between the parties, each of the opinion that their own applies or supersedes the other.
The prudent course of action, particularly where you deal regularly with the same party, would be to enter into a pre-agreed contract on terms that both parties are familiar and happy with. The consequences of neglecting to sort this may be either (a) the other side’s terms will apply; or (b) the Sale of Goods Act, etc will apply, which can have a number of unwelcome and unintended consequences.