'Battle of the forms'—first shot, framework agreements and jurisdiction clauses - TRW v Panasonic [2021] EWCA Civ 1558

 

Quadrant Chambers

 

5 November 2021

 

While the 'last shot' usually wins the contractual 'battle of the forms' to determine which party’s standard terms govern the contract concluded, in TRW v Panasonic, the Court of Appeal held that, exceptionally, the seller’s 'first shot' had won the battle by creating an overarching 'master' agreement governing all subsequent purchases by the buyer. The court also rejected (obiter) the buyer’s argument that that overarching agreement was unsupported by consideration, drawing an analogy with public procurement and framework agreements, which have been held to be binding and never challenged for lack of consideration…

 

What are the practical implications of this case?

 

This decision demonstrates that the party firing the 'last' shot, ie the last party to send its standard terms to its counterparty before performance—will not always win the battle to determine which party’s standard terms govern. Instead, by carefully drafting its standard terms to prevent any other terms from applying, and crucially, securing the agreement of its counterparty to those terms at the outset, the party firing the 'first' shot can prevail…

 

Further, this decision makes it clear that an agreement at the outset that one party’s standard terms will govern all future transactions between the parties is supported by good consideration, even without any purchases or other transactions being concluded between the parties.

 

What was the background?

 

… In 2011, the buyer had signed the seller’s 'customer file' which stated, 'legally binding signature of the Customer' below the buyer’s signature and that the buyer had 'received and acknowledged' the seller’s standard terms, which terms were printed on the reverse of the document. The buyer’s orders placed in 2015 and 2016 provided that the transistors were to be delivered 'in accordance with' the buyer’s standard terms, which the orders said the seller was aware of and was deemed to have accepted. The buyer commenced proceedings before the English High Court, as provided for in the jurisdiction clause in its standard terms, for damages for alleged defects in the resistors supplied. The seller applied to set aside service of proceedings and a declaration that the English courts lacked jurisdiction on the basis that the Hamburg jurisdiction clause in its standard terms applied.

 

What did the court decide?

 

The Court of Appeal affirmed the decision of Mr Justice Kerr below setting aside service of process and declaring that the English court lacked jurisdiction, reasoning as follows.

 

… The court then held that, though in a traditional battle of the forms dispute, the conventional analysis is that the terms and conditions of the party who fired the last shot (often, the sender of the last document in time) will usually prevail, the judge had been correct to hold that, in the present case, it was the seller’s first shot which prevailed. In doing so, the court:

'this is therefore one of those "battle of the forms" cases where careful drafting has protected Panasonic [the seller] against the "last shot" doctrine'

 

Full report