Using standard terms of sale

A recent High Court decision is a reminder that businesses should consistently follow their chosen methods of incorporating standard terms, such as printing terms on the back of documents and retaining copies of signed agreements. The case concerned a claim for a contribution to £7 million of liability for negligence or breach of contract. The court had to decide whether the defendant’s standard terms, which limited its liability to the price of the goods supplied, were incorporated into the supply agreement.

The court held that the defendant’s standard terms were expressly incorporated into the contract because, on the evidence, the plaintiff must have signed an application form to get goods on credit which expressly incorporated the defendant’s standard terms (although that document could not be located). While the defendant succeeded in limiting its liability, it could have avoided dispute over incorporation had it been able to produce a copy of this form. During the course of the trial, the defendant was also unable to show that its standard terms were printed on the back of every invoice.

Businesses should therefore ensure that all relevant company paperwork bears the correct set of standard terms, that these are audited and updated regularly, and that they keep copies of key contracts. Our checklist summarises the advantages and disadvantages of using standard terms and sets out how standard terms can be incorporated effectively.