CMS Expert Guide to the battle of forms in contract law

The following CMS Guide on Battle of Forms situations illustrates how this important issue in commercial contracts is addressed in various countries worldwide. This CMS Guide addresses commercial contracts between companies (hereinafter also “B2B contracts”). In certain cases, the country chapters also refer to specific provisions applicable to consumers, without outlining them in detail or comprehensively.

In commercial contracts, each party usually makes reference to its “own” standard terms and conditions (hereinafter “Ts&Cs”). For example: in a sales contract, the seller refers to his standard delivery terms in his offer document, whereas the purchaser refers to his standard purchase conditions in his order document. Usually, both Ts&Cs contradict each other in important areas, e.g. when it comes to warranty rights or limitation of liability. The question which Ts&Cs apply, or if any apply at all, is commonly described as the “Battle of Forms”.

Generally, a Battle of Forms situation can be addressed in two ways which will be presented from a general perspective under no. 3 of this Introduction and specifically in the individual country chapters. To apply either method to address a Battle of Forms situation, however, requires that the respective Ts&Cs have been validly agreed on between the parties; i.e. validly included in the contractual relationship. Thus, in this Guide, before illustrating which rule applies to Battle of Forms situations, under no. 2 of this Introduction we describe how Ts&Cs can be included.

When it comes to the inclusion of Ts&Cs, parties in B2B contracts often refer to their respective Ts&Cs in the offer documents, the order documents, the order confirmations, the shipment documents and/or the respective invoices.

When referring to their respective Ts&Cs, the parties usually only refer to their Ts&Cs or highlight the fact that the Ts&Cs can be found on the homepage of the respective party. The actual wording of the Ts&Cs is often not attached.

The individual country chapters illustrate which requirements the respective national law sets out for a valid inclusion of Ts&Cs, in particular for the situations just described.

a. Last-Shot Rule
According to the Last-Shot Rule, the Ts&Cs of the party which refers to its Ts&Cs most recently apply. The Last-Shot Rule can lead to a “ping-pong” situation. Both parties continue to refer to their respective Ts&Cs so that their Ts&Cs are the ones which apply.

b. Knock-Out Rule
According to the Knock-Out Rule, if Ts&Cs contradict each other both sets of Ts&Cs do not apply. Therefore, no “ping-pong” situation can occur. The Knock-Out Rule thus does not require the parties to again make reference to their respective Ts&Cs. However, in jurisdictions which apply the Knock-Out Rule it is difficult to have one’s Ts&Cs included at all. Often, the parties end up by having statutory law applied.