Battle of the Forms – suppliers beware!

Barry Riley

In a recent case, GHSP Inc v AB Electronic Limited , the High Court resolved a battle of the forms dispute where both parties had refused to accept the other’s terms and conditions and both had claimed to contract on its own terms.

AB Electronic Limited (“ABE”) supplied components to GHSP Inc (“GHSP”). These goods were defective and GHSP incurred substantial losses which it wanted to claim from ABE.

A battle of the forms occurs when one company offers to buy goods from another on its terms and the other company accepts the offer on the basis of its own standard terms. The battle is often won by the party who fired the “last shot”, i.e. the last party to present terms that are not unequivocally rejected by the recipient.

ABE had limited its liability considerably under its terms and GHSP’s terms had imposed unlimited liability on ABE. The High Court considered whether the contract concluded between them incorporated ABE’s terms; GHSP’s terms; or some other terms, and ruled that neither ABE’s terms nor GHSP’s terms applied. The contract was governed by the Sale of Goods Act 1979 which meant that ABE’s liability was unlimited.

The outcome of this case is particularly important for suppliers who start performing the contract before it is signed and the issue of liability is unresolved.

Barry Riley
briley@metcalfes.co.uk
DDI – 0117 9453 042

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