Reasons why delivery note is important in battle of forms

Battle of forms is part of an on-going aspects of contract formation which has to do with contractual offers and terms, and whether or not they are accepted or countered. The trick is in knowing how it occurs and how to avoid it.

WHAT IS BATTLE OF FORMS?

The battle of the forms involves a series of forms such as orders, delivery notes, etc., issued in sequence by purchaser and supplier, each containing terms that appear to override those on the previous document

The difference in terms presented by the forms sent by the suppliers and the buyers is what creates a ‘battle’, for each party wants the other party to contract using their own terms. Meaning the supplier is sending documents containing its terms and wants the purchaser to accept these terms and have the terms form the basis upon which the contract is formed.

In case of sale of goods, you can see why delivery note being the last document to be sent is important since in battle of forms the general principle is the last document wins.

WHY DELIVERY NOTE MATTERS IN BATTLE OF FORMS

Delivery note matters a lot in battle of the forms for reasons such as;

• The last document rules

This is a general principle which implies that if the parties are using documents to “fight” a battle in which one document contains terms that are countered by the next document, then the terms contained in the last document are the ones that win.

This will, more often, put the supplier in a stronger position. Why is that? Simple, because of the delivery note.

Normally when goods are delivered, the delivery note is usually the last ‘form’ in the ‘battle’. In short, the last counter. This then becomes the document that determines whose terms and conditions apply to the contract. The delivery note will hold the supplier’s terms.

• People don’t pay attention to it

There is a contractual risk that comes with contracting on the supplier’s terms, for instance, a specification that reflects what the supplier wishes to sell, rather than what the

purchaser wishes to buy. This is what a buyer could end up accepting if they fail to pay attention to the terms presented on the delivery note.

How this happens is that the goods inwards staff and other ‘receivers’ of goods and deliveries are often unaware of the significance of the delivery note as a legal document and part of the contract. The risk here is that the delivery note is not checked and yet the goods have been received which indicates implied acceptance of the terms. This could mean that the terms may not be in the interest of the buyer.

A case that best explains this was the case of Butler Machine Tool Co Ltd v. Ex-Cell-O Corporation (1979)

Butler offered to sell using its own standard terms. Ex-Cell-O placed an order using its terms (which were different from Butler’s). That order form had a tear-off slip which the supplier had to return. That slip acknowledged the terms of the order. Butler did this.

The courts held that the return of this slip was an acceptance of the terms and created the contract.