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Standard terms provide resistance against "last shot" doctrine

Author
Alexander Westin-Hardy

Associate

London

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13 December 2021

While the “last shot” generally wins the contractual “battle of the forms”, the Court of Appeal confirmed that, exceptionally, careful drafting of a party’s standard terms could create an overarching “master agreement” governing all future contracts.

The dispute concerned the sale of allegedly defective electrical resistors by a German seller, Panasonic, to an English buyer, TRW. The immediate question before the court was one of jurisdiction: which party’s standard terms governed the individual contracts concluded?

In 2011, TRW had signed Panasonic’s “customer file”, which contained general conditions requiring all disputes to be brought before the German courts. TRW subsequently placed purchase orders in 2015 and 2016, stating that delivery would be in accordance with TRW’s standard terms. TRW’s standard terms provided for exclusive jurisdiction of the English courts. Following delivery of the allegedly defective goods, TRW commenced proceedings in England. Panasonic applied to have the proceedings set aside.

The Court of Appeal affirmed the lower court’s decision setting aside service and declaring that the English court lacked jurisdiction, for the following reasons. First, since decisions on jurisdiction disputes involve an evaluative exercise on all the evidence, appellate courts should not lightly interfere in the absence of material error. Second, the court agreed that Panasonic’s “first shot” prevailed, invalidating any subsequent conditions of TRW. It rejected TRW’s argument that the signed customer file was a mere acknowledgement of receipt of Panasonic’s standard terms with no contractual effect, and agreed that the arrangement created was analogous to the calling off of goods in a public procurement framework agreement. Further, the court held, obiter, that there was clear consideration for TRW’s binding agreement that Panasonic’s standard terms would govern any subsequent supply contracts between the parties, even without any purchases being concluded. The court therefore dismissed TRW’s appeal.

The decision serves as a reminder that the party firing the “last shot” (ie the last document sent before performance) may not always win the “battle of the forms” to determine which party’s standard terms govern a contract.

Judgment: TRW v Panasonic