The Battle of the Forms: the last shot doesn’t always win

3rd February 2021

The Battle of the Forms refers to the exchange of standard terms of business between two contracting parties and the ‘winner’ of that battle being the party whose terms are incorporated into the resulting contract. It is common practice that the ‘last shot wins’, i.e., the party who is the last to provide its terms is the one who can generally rely on those terms being incorporated.

Changing the battleground?

However, the recent decision in TRW Ltd v Panasonic Industry Europe GmbH and another company [2021] EWHC 19 (TCC) may well have changed the battleground.

TRW v Panasonic concerned a purchase by an English based company, TRW, of electronic resistors from Panasonic (in Germany). Each party had supplied its own General Conditions (GC) document as part of the negotiation of the sale/purchase of the resistors. Each GC document contained a term on jurisdiction. Perhaps unsurprisingly, the TRW GC had a provision that the English courts would have jurisdiction and the Panasonic GC stated that the German courts would have jurisdiction. Panasonic supplied its GC document upon the proposed sale. TRW responded with a purchase order, along with its own GC.

Battleground background

Though, before jumping to Mr Justice Kerr’s conclusion of whether or not the ‘last shot’ won, there is a requirement to go back a little further in time.

TRW and Panasonic had negotiated sales and purchases for quite a considerable amount of time (since around 1998, in fact). In 2011, TRW had signed Panasonic’s ‘customer file’ which confirmed that it had ‘received and acknowledged’ the seller’s (Panasonic’s) standard terms.

Crucially, those standard terms stated that German law would apply to the contract and would be subject to the jurisdiction of the courts in Hamburg. They also contained a provision to clearly dis-apply any terms that may be received in response to Panasonic’s GC’s, unless Panasonic agreed to such terms in writing.

The disputed matters between TRW and Panasonic related to resistor sales contracts from 2015 and 2016. In 2020, TRW issued a claim (in the English courts) against Panasonic Industry Europe GmbH on the grounds that resistors that had been supplied as a result of the 2015/2016 purchase were allegedly defective.

Panasonic’s position was that service of the claim was invalid as the English court had no jurisdiction and accordingly, the German courts had exclusive jurisdiction over any claim. TRW argued that, in providing the purchase order and its GC in response to Panasonic having provided its terms, the ‘last shot’ doctrine should be applied and the TRW terms should be the ones that apply (meaning the English courts had jurisdiction).

The decision

The court sided with Panasonic and held that the German courts did indeed have exclusive jurisdiction and the proceedings in the English court should be set aside. Mr Justice Kerr relied upon the provision in Panasonic’s GC that prohibited any contrary terms applying, unless specifically confirmed in writing, and the fact of TRW having signed the ‘customer file’ in 2011 meant that Panasonic’s GC would apply to subsequent orders placed by TRW, notwithstanding what terms TRW may elect to send with such orders.

The court considered that if signing the Panasonic ‘customer file’ did not mean the Panasonic GC was incorporated (as argued by TRW), then obtaining the buyer’s signature would have been a pointless exercise. It was therefore appropriate to put weight on this positive act and the court confirmed that TRW’s choices, should it wish for its own terms to apply, were to either not purchase from Panasonic at all or obtain its written confirmation that the TRW terms applied.

Neither, of course, happened and the court found that the ‘first shot’ won the battle and the ‘last shot’ missed its target.

How can we help?

If you need any legal advice regarding the Battle of the Forms in a contractual dispute, contact our litigation and dispute resolution lawyers. We have a strong litigation and dispute resolution group that act on disputes in the Courts and in arbitration for international, national and regional clients.

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