Can careful drafting beat the ‘last shot’ doctrine?

The conventional analysis in a traditional battle of the forms dispute is that the terms of the party who fired the last shot will usually prevail.  In the recent case of TRW Ltd v Panasonic Industry Europe GmbH & Anor, the Court of Appeal decided that careful drafting protected Panasonic against the ‘last shot’ doctrine.  The first shot therefore won the battle.

Background

TRW had purchased resistors from Panasonic (for inclusion in automotive products) which they subsequently alleged were defective.  Panasonic applied to set aside service, seeking a declaration that the English court had no jurisdiction over the claim.

The parties had been in a commercial relationship for many years, during which time Panasonic’s customers were required to sign a “customer file” document.  The document relevant to the transistors in question was signed by TRW in 2011 and contained an acknowledgment that TRW had received and acknowledged Panasonic’s General Conditions, which were set out on the back.  These conditions were subject to the exclusive jurisdiction of the courts of Hamburg.

In 2015 and 2016, two “blanket orders” were issued by TRW for the resistors subject to the action, both of which referenced delivery to be in accordance with TRW’s conditions of purchase.  Panasonic acted on the blanket orders but were not asked to confirm their agreement to the TRW terms.

The judge in the first instance concluded that Panasonic’s General Conditions protected Panasonic against the last shot doctrine and therefore Panasonic had the better of the jurisdictional argument “by a comfortable margin”. TRW appealed.

Decision

The Court of Appeal agreed that the last shot in this case had not hit the target. As TRW’s terms did not trump the Panasonic General Conditions, the German courts had jurisdiction.

In reaching this conclusion, the court provided a useful summary of the case law relating to the battle of the forms.  In particular, it considered the case of Tekdata Interconnections Ltd v Amphenol Ltd [2009] where, although the last shot doctrine was successful, the Court of Appeal had recognised that the doctrine could be displaced by evidence of the parties’ objective intention that the last shot should not prevail.   This is also acknowledged in Chitty on Contracts which states that it is possible by “careful draftsmanship” to avoid losing the battle of the forms.

The court agreed that the signing of the customer file by TWR was the key event, as it was the only time that one party expressly signed something which referred to the other’s terms and conditions. An analogy could be drawn between this sort of arrangement and framework or ‘master’ contracts more generally. Therefore TRW was not successful in its ‘no consideration’ argument.

As the judge at first instance pointed out, the Panasonic General Conditions were “deliberately and carefully drafted to protect Panasonic against the last shot doctrine”. The conditions expressly stated that they would continue to apply even if Panasonic delivered the goods without reserving their position or referring back to their own conditions.  This was therefore one of the case where careful drafting protected Panasonic from all subsequent shots.

Implications

Although previous cases and commentary had indicated that the last shot doctrine could be displaced by evidence and careful drafting, this case entrenches that principle. 

If a party wishes to ensure its standard terms govern all future transactions, careful wording will be required and crucially agreement should be obtained from the counterparty at the outset. This should ideally be in writing, as would be required for the creation of an overarching master agreement.    

This case demonstrates that the courts will consider the exchange of standard terms carefully and will objectively assess the intention of the parties to determine whether the ‘last shot’ has indeed won the battle.

Contributor: Emily Holdsworth

This publication is intended for general guidance and represents our understanding of the relevant law and practice as at January 2022. Specific advice should be sought for specific cases. For more information see our terms & conditions.