In brief, a contract is formed when there is acceptance of an offer to contract, on terms that are sufficiently certain, and where there is consideration (ie a reciprocity of promises or obligations).
There also needs to be an intention to create legal relations, but this is presumed in commercial/B2B circumstances, unless rebutted by clear evidence.
Businesses might think that marking all correspondence as 'subject to contract', 'heads of terms' or 'memorandum of understanding', or other such varieties, will be sufficient to prevent a contract being entered into until such time as the heading is removed.
However, if all the criteria for a contract are met, a contract will be formed despite any such heading.
Put the contract in writing
Having clear, written contract terms goes a long way to minimise the risk of contractual disputes.
If a business is going to be entering into repeated transactions with various businesses, then having standard terms and conditions is a good starting point.
But make sure to take advice on when and how the standard terms and conditions should be communicated to the other party.
For example, having your standard terms and conditions on your website will be of no help if the other party is not directed to them.
In a sale of goods or provision of services relationship, where parties exchange quotations, purchase orders, order acknowledgement, delivery notes and invoices, it can be difficult to pinpoint the moment a contract is entered into.
As the supplier, it is worthwhile thinking about the order process, and designing/drafting your documents to fit.
If the transaction is particularly high-value or significant, then it would be worth drafting a bespoke contract for that transaction rather than relying on standard terms and conditions.
Read the contract
This is fairly simple advice, but how often have you, in a personal capacity, signed contracts or agreed to terms and conditions without reading them?
As a consumer, we are well protected from onerous contractual terms and conditions, but in the B2B sphere, businesses are very much left unprotected.
Essentially, a court will not rewrite a commercial contract or otherwise interfere in a commercial contractual relationship simply because it might be a bad deal for one party.
As the Huntsworth Wines case above demonstrates, standard terms and conditions can be drafted to limit or otherwise exclude a party's liability to the other.
If a business agrees to contract terms but has not read them, it will be on the back foot should something go wrong.
It is much better to be aware of the terms of a contract prior to agreeing them either to be able to negotiate more favourable terms or at least mitigate any risk from such terms – for example, in the Huntsworth Wines case, Huntsworth could have taken out insurance knowing that London City's liability was limited.
