The importance of agreeing terms and conditions in the delivery of goods

Chloe Wishart, solicitor in Harrison Drury’s corporate team, highlights the importance of agreeing terms and conditions in the delivery of goods in reference to the recent case of BDW Trading Limited v Lantoom Limited.

A summary of the case

During a housing development under the Barratt Homes brand, developers BDW Trading Limited entered into a supply contract for 500t of stone which was used for the external leaf of cavity walls in houses on the development. Soon after the development was completed, homeowners of the new housing noticed issues with the external stone cracking, spalling and falling away.

After investigations, BDW concluded that the problem was with the quality of the stone provided by Lantoom Limited under their supply contract.

The issue then surrounded whether the contract was entered into on BDW’s standard terms of conditions or Lantoom’s. A key matter highlighted by the judgment in this case is the ‘battle of the forms’ which often arises in supply contracts.

What is battle of the forms?

Battle of the forms is a common issue where one party offers to buy goods on its standard terms and conditions and the other party accepts on its own standard terms and conditions. It often arises in cases like BDW and Lantoom – where suppliers and buyers of goods both want to agree the contract on their own terms and conditions.

Normally the conditions that prevail are the terms and conditions that were the last to have been sent and received with no objection or counteroffer being made. Contracts will however not always be concluded on this basis and the determining factor will be the documentation conveyed between the parties.

The claims in this case

The matter was taken to the High Court of Justice where both BDW and Lantoom argued that the agreement had been formed under their own standard terms and conditions.

BDW’s claim was the contract was formed when they sent their purchase order for 500t of stone slate which was accepted with delivery of the stone slate. The purchase order form contained their standard terms and conditions.

Lantoom’s claim was that on delivery they provided a delivery note which contained their standard terms and conditions. Lantoom claimed the delivery note constituted a counteroffer on their terms and conditions which was accepted with the acceptance of the stone slate by BDW.

Which terms and conditions the contract was concluded on was a prevalent issue due to clause 10.5 of BDW’s contract which allowed for an indemnity against loss and damage. This term was not mirrored in Lantoom’s standard terms and conditions.

The outcome

The judge in this case concluded that the contract was based on BDW’s standard terms and conditions. His reasoning for the judgment was based on a number of considerations:

• The purchase order was sent before any delivery and was therefore relied on by Lantoom when they delivered the stone slate and complete the terms of the purchase order.
• In addition, the purchase order was for the entire 500t slate whereas the delivery note only referenced the 25t that had been delivered at the time.
• Further, the delivery note did not indicate that it contained terms and conditions.
• Lastly, the delivery note was signed by a forklift driver at the site who had no authority to enter this type of contract on behalf of BDW.

Therefore, the delivery note was merely a note in respect of the first 25t of stone slate that was being delivered and could not be considered a counteroffer even though it contained standard terms and conditions.

Upon delivery Lantoom accepted the offer by BDW and the contract was concluded on BDW’s standard terms and conditions.

Accepting terms and conditions

As mentioned above, usually the last offer to be sent during the delivery of goods contains the terms and conditions for the agreement. The BDW Trading Limited v Lantoom Limited case highlights that supplier delivery notes are often not accepted as counteroffers and therefore the supplier’s terms and conditions will not govern the basis of the agreement.

Although much depends on the facts of the case and decisions can vary from case to case, suppliers should ensure it is clear when they have accepted an offer and whether their terms and conditions will act as a counteroffer.

If you operate a business that deals with suppliers, or supplies goods, Harrison Drury’s corporate team can provide helpful advice regarding drafting and dealing with terms and conditions. Contact our corporate team on 01772 258321.