How to effectively incorporate terms of business

Standard terms of business are only effective if they are properly incorporated into the contractual relationship with a customer. Clearly it is best to have customers expressly sign terms of business or confirm acceptance of them in writing. However, in practical terms, this is not always achievable. As such, it is often the case that other incorporation strategies need to be relied upon.

It is possible for a supplier to effectively incorporate terms of business into their contractual relationship with customers without them always having to expressly sign them or agree to them if they sufficiently notify customers that they conduct business on their terms of business and make those terms available to customers. It is well established that terms and conditions will be effectively incorporated into the relevant contract so long as reasonable steps are taken to bring the existence of the terms and conditions to the notice of the other party before the transaction is concluded. Once drawn to the attention of the other party, incorporation will take place if the latter proceeds in such a way that they are deemed to have accepted the terms (for example, they proceed without raising any objections). By way of example, these principles are general enough to apply to the incorporation of terms and conditions into a contract by means of a reference to where they can be found (such as on a website).

Whilst standard terms and conditions of business are generally used more by a supplier, it is becoming increasingly common for customers, especially larger corporations, to adopt their own standard terms of purchase (whether of goods and/or services). This is something which suppliers will need to be mindful of as if both the supplier and the customer purport to impose their own standard terms and conditions, difficulties can arise in determining which terms will prevail and which will therefore be enforceable. In practice, the courts take the view that the last set of terms despatched before either acceptance or performance of the contract will usually prevail. However, because this is an issue of interpretation this will not always be the case and the court can choose not to follow this rule if it appears to be inconsistent with the parties’ intentions. With this in mind, suppliers should check customer orders for reference to any other terms and conditions and, if they contain the same, acknowledge the order and confirm it is accepted subject to their own terms of business.

For further information on commercial law related issues please contact Christopher Buck, Associate Partner and Solicitor, on 01908 660966 / 01604 828282 or by email at Christopher.Buck@franklins-sols.co.uk