Incorporating your standard terms and conditions in contracts

Many businesses have their own standard terms and conditions. However, standard terms and conditions will only be binding upon the parties to a contract if they have been incorporated into the contract.

How can I ensure my standard terms and conditions are incorporated into a contract?

If you wish to incorporate your standard terms and conditions into a contract, you must ensure you give the other party notice of your standard terms and conditions before the contract is made.

Notice can be given by:

  • sending or handing a copy of your standard terms and conditions to the other party; or
  • ensuring they are drawn to the other party’s attention in some other way, eg, by posting a copy on your website or by printing a copy on the reverse of order forms and invoices.

If your standard terms and conditions are printed on the back of a document, as is commonly the case, it is important when sending communications by fax, for example, to ensure the other party is provided with copies of both sides of the document.

The question as to whether adequate notice has been given in a particular case will depend upon the circumstances.

Since it is necessary to ensure the standard terms and conditions are brought to the attention of the other party before the contract is made, copies printed on documents after that date such as order confirmation forms or invoices will only be binding on the parties if they have been brought to the other party’s attention on at least two previous occasions (where this has happened the standard terms and conditions are said to have been incorporated by virtue of a ‘previous course of dealings’ between the parties).

If you have given adequate notice of your standard terms and conditions to the other party, they will normally be deemed to have accepted them. Most standard terms and conditions contain an express provision setting out the circumstances in which they are deemed to have been accepted. Where such a provision is not included it may, however, be possible to show the other party accepted the terms and conditions through their conduct.

It is not necessary that the other party sign the standard terms and conditions, although some businesses prefer to ensure they are signed to minimise the chance of a dispute arising later.

If both parties supply standard terms and conditions to each other which terms will apply?

Often when businesses deal with each other, both will send the other a copy of their standard terms and conditions during the course of the negotiations leading up to the creation of the contract. Where this happens the standard terms and conditions sent last will apply providing they were adequately brought to the attention of the other party. This process is often known as ‘the battle of the forms’ or ‘the last shot doctrine’.

How can I prove my standard terms and conditions were incorporated into the contract?

If a dispute arises as to whether your standard terms and conditions were incorporated into a contract, you will need to satisfy a court that it was more likely than not that your standard terms and conditions were incorporated into the contract.

It is therefore a good idea to keep records as to how they were brought to the other party’s attention. If they were sent by email, for example, you should retain a copy of the email and if they were sent via post, you should ensure the standard terms and conditions are referred to in the letter and that a copy of the letter is retained.

Often standard terms and conditions are revised from time to time. If you have changed your standard terms and conditions and a dispute arises you will need to be able to show which version was in place at the time when the contract was made. For this reason standard terms and conditions are often marked with a date from which they are to take effect.