In my October post, we talked about the peril of a buyer ignoring the seller's "terms and conditions" in a sale of defective blueberries from Michigan growers. I suggested that the buyer could have prepared a "sales acknowledgment" to send to the seller along with the signed offer acceptance. This approach could have negated the seller's terms and conditions that contained numerous risk-shifting provisions skewing the deal in seller's favor. These provisions included restrictions that limited buyer's remedies if seller breached (which happened), mandatory jurisdiction and venue in seller's home town, and the requirement that the losing party in any court dispute pay the winning party's actual attorney fees, a provision that resulted in the buyer's payment of big bucks to the seller's lawyers.
Lawyers have an ominous name for this scenario: the "battle of the forms." Generally, this battle occurs when contracting parties:
> don't negotiate a sale of goods beyond the bare minimum of description, quantity, price, and delivery date;
> have their own different set of legal terms that they want to control; and
> these legal terms aren't negotiated.
Each party may insert "magic language" in its form to increase the odds that it will negate the other party's form. (This magic language is a bit too "inside baseball" to be detailed here, and I have my favorite magic language - together with a deployment strategy - that I wish to keep confidential.) Be warned, however, that what one party views as magic language to win the battle of the forms will likely be disputed by the other party; in the end, magic language will have to be considered by a court or arbitration panel and may turn out not to be so magic after all. And a judge or arbitration panel may well disregard both parties' forms (regardless of their supposedly magic language) and require them to comply with certain "default" terms and conditions contained in the Michigan (or other State's) Uniform Commercial Code.
The best way to avoid the battle of the forms is for the parties to negotiate the business and legal terms of their deal and sign a plain-English contract that reflects a meeting of the minds. The parties should hire a competent, cost-effective business lawyer for that purpose (hint).
The battle of the forms usually occurs in the context of a sale of goods between business "merchants" (not consumers), rather than services or an intellectual property (including a software) license. Most information technology companies are spared this battle because they tend to negotiate master agreements with engagement-specific statements of work. (But they must be careful to specify what document controls when there is a conflict between the master agreement and a statement of work. So, the ill-considered use of technology contracts can lead to trouble too.)
Hopefully, you have been spared the battle of the forms by negotiating your contracts with the other party rather than by simply exchanging forms with it - and betting that your document with its (supposedly) magic language will prevail if there is a dispute.
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