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If you are a goods or services supplier or a reseller of goods and services, you will likely have a set of standard business terms and conditions that all customers must accept and agree with to use your business. However, your customer may also have a set of standard terms and conditions that they use, and they may send these to you. In this scenario, whose terms will apply? It is important to establish which set of terms and conditions will govern the business relationship. 

This article will consider what makes a party’s terms legally binding, how to ensure the other party’s terms do not replace your own terms, and effective ways to manage to receive the other party’s terms.

Binding Terms

Under Australian law, a legally binding contract must involve an offer and an acceptance of those offer terms. If the counterparty does not accept the exact terms offered and attempts to vary some of the terms, this is a counter-offer, not acceptance.

If both parties continue with the supply/purchase arrangement without express acceptance of the terms and conditions, acceptance may be inferred by the party’s conduct. For example, delivering goods or making payments. If this happens, the terms of a party’s last offer (which can come from either party) will apply.

When two parties both want their own terms and conditions to form the basis of the contract, this is known as ‘battle of the forms’. 

For example, a supplier will provide a buyer with a quote to provide goods subject to its standard terms (an offer). The buyer then issues a purchase order for the goods, containing the buyer’s standard terms (a counter-offer). Without agreeing on which terms apply, the parties continue with the sale and purchase. This is now a battle of the forms. 

We recommend that you always clarify which terms apply to avoid unnecessary confusion, delays and unexpected costs at a later point in the business relationship. 

How to Make Your Terms Enforceable

There are three key ways you can ensure your terms are enforceable. You should: 

  1. notify customers of your terms;
  2. provide your customers with an opportunity to review the terms, for example, by publishing them on your website or attaching them to your quote or invoice;
  3. clarify how the customer can agree to your terms, which may involve the customer taking positive action to show agreement. For example, by clicking on the ‘accept’ button if sent digitally, or by accepting the goods or services. 

Implied vs Express Consent

Some suppliers will rely on implied consent, such as accessing a website or using a service, as a customer’s agreement to its terms.

However, a lack of express confirmation will make it much more difficult for you to enforce your terms.

Enforcing your terms and conditions can be done in several ways. The most common is to use a checkbox that a customer must click and inform customers that by checking the box, they agree to the supplier’s terms and conditions. 

How to Ensure Your Terms Aren’t Replaced by Another Party’s

If you want to ensure your terms are the binding set, there are a few steps you can take. 

Expressly reference your terms and conditions

During discussions with a customer and in all written communications such as emails and quotes, expressly reference your terms and conditions. You should also ensure the customer has access to them by sending them a weblink or attaching a copy to your documents.

Confirm in writing 

you do not accept their terms

Suppose your customer refers to their terms, references them on a purchase order, or sends them directly. In that case, you should confirm in writing that you do not accept their terms and that you will only proceed with the supply/purchase arrangement on your terms and conditions. You can also add this wording to any invoices you issue or emails you send. Again, you should also attach a copy of the terms which you refer to. 

Do not perform obligations until it is clear whose terms and conditions you are following

Refrain from performing any obligations, such as supplying goods or paying a deposit, until you are certain which terms will apply. 

Enter a new contract if necessary 

If practical, enter into a new contract that is negotiated and agreed upon by both parties. This will provide certainty over which terms will govern the business relationship and avoid any further confusion.

Terms to Include 

In your standard terms, or an agreed contract, include clauses that cover:

  • which documents take precedence in the event of inconsistency, for example, “The parties agree that these Terms take precedence over any ‘click-through’ terms that you may be presented with when using the services”;
  • the entire agreement between the parties in relation to the matter, for example, “These Terms contain the entire understanding between the parties, and supersede all previous discussions, communications, negotiations, understandings, representations, warranties, commitments and agreements, in respect of its subject matter.”; and
  • how the terms can be varied, for example, “These terms may be amended in writing only and signed by both parties.” 

When You Do Not Want to Accept Another Party’s Terms

If you do not want to accept another party’s terms, ensure you politely but clearly tell them that you do not agree to their terms. You should send them a copy or direct them to a webpage that sets out the terms you will accept. Furthermore, resolve whose terms will apply and confirm this in writing before proceeding with the arrangement. 

Key Takeaways

To be legally binding, contracts must have four basic principles, which include an offer and acceptance. If two parties, you and the customer, both ‘offer’ terms and conditions as the basis of the business relationship, it might not be clear which terms will apply. To avoid this and maximise the chances of your terms being successful, you should tell your customer that you do not accept their terms and that yours will apply. You also should not perform any of your obligations under the arrangement until this is resolved. Otherwise, your conduct may be inferred as acceptance of the other party’s terms. 

If you have any questions or would like further advice or assistance to draft a clear set of business terms and conditions, contact LegalVision’s business lawyers on 1300 544 755 or fill out the form on this page. 

Frequently Asked Questions

What do I do if I do not want to accept the customer’s terms?

If you do not want to accept another party’s terms, ensure you politely but clearly tell them that you do not agree to their terms. You should send them a copy or direct them to a webpage that sets out the terms you will accept.

What is the difference between implied and express consent?

You may rely on implied consent, for example, a customer’s agreement to terms when accessing a website or using a service. However, a lack of express confirmation will make it much more difficult for you to enforce your terms. The most common express consent method is to use a checkbox that a customer must click and inform customers that by checking the box, they agree to the supplier’s terms and conditions. 

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