Terms of business (T&Cs) are vital for the smooth operation of supply of goods and services for businesses across all industries. A clearer, functional set of standard T&Cs is a hugely valuable business tool that can govern business relationships without the need for individually-negotiated contracts with each customer or supplier, which would be impractical to achieve for busy commercial parties.

While firms strive for clearly drafted T&Cs setting out their delivery obligations, liability and apportionment of risk against a supplier or customer, this can be undermined if the supplier or customer instead seeks to impose their own T&Cs on the relationship.  It is therefore important to understand whose T&Cs will prevail to any business contract. In legal doctrine, this is known as the “Battle of the Forms”.

In most cases, if two contacting parties each seek to impose their own equally-balanced T&Cs, the courts will apply the rule that the “last shot wins”. This means that the last set of T&Cs that are shared and acknowledged or accepted by the other party will prevail. While this is simple enough to comprehend, it presents difficulty where both parties seek for their T&Cs to be the ‘last shot’ issued in hope that this alone will make their T&Cs the binding document. It also has its limitations that even if the T&Cs are issued last, if they are not validly acknowledged or accepted by the other side, they would still not take legal effect.

To help counteract these complications, there are certain steps that businesses can take to make sure that their T&Cs stand the best chance of being the accepted terms of a contractual relationship.

Drafting of the T&Cs:

• Include clear wording that the T&Cs prevail over any other terms. This should include rival T&Cs, any other documents like pre-contract emails and even verbal discussions.
• Clarify the contract formation process – At its core, a contract requires an offer and an acceptance. If a supplier makes an offer by sending a quote, which a customer accepts, then the customer’s action creates the contract – potentially using their T&Cs. This suits a customer looking to win the battle of the forms. If a supplier wants to win the battle though, it should ensure it (not the customer) creates the contract. Supplier T&Cs should clarify that a quote is not a formal offer, but the customer’s reply to or purchase order following that quote forms the offer, which the supplier accepts or rejects. The T&Cs should confirm that the contract comes into existence only upon the supplier’s acceptance and on the basis of the supplier’s T&Cs. If the customer does nothing further to challenge that position, it gives a clear indication that the supplier’s T&Cs should apply to the contract.

Practical steps for suppliers

• Having set out an order process in the T&Cs, always follow it in practice. Avoid makinginadvertent offers by ensuring that pre-contract documents and correspondence (for example quotes or emails sending out a catalogue) are clearly described as not being offers. That way, the offer and acceptance process is not accidentally triggered at the wrong time and the process in the T&Cs can operate as planned.
• Refer to the T&Cs in all pre-contract documents. A simple way to do this is to include a hyperlink to the T&Cs in all relevant documents.
• Make the position even clearer when quoting: Quotations should clearly state that (a) they are not an offer and (b) any order that is placed further to the quote is based on the supplier’s standard T&Cs. For added clarity, the T&Cs could be appended to the quotation itself.
• Send the T&Cs again with acceptance: Even if the T&Cs were shared at quote stage, attach them again when sending an order acknowledgment and make clear in the Order Acknowledgment email that the order – and the legal contract between supplier and customer – is based solely on the supplier’s T&Cs.
• Commence work only after order acknowledgement. Staff should not commence work on an order until after the order acknowledgement has been sent. This counters the claim that the customer “created” the contract (and so the customer T&Cs apply) because the supplier started work on the contract following the customer’s action or correspondence.

For further information on how to make your T&Cs work harder for you, please contact Becky Cooper at becky.cooper@blasermills.co.uk or on 01494 932614.

2024 update

The UK’s departure from the European Union has had an inescapable impact on cross-border trade. One important aspect that has not grabbed headlines but has had major implications for domestic owners and exclusive licensees of intellectual property rights (IPR) such as trade marks in the UK, lies in the changes to the law relating to parallel imports and exhaustion of rights.

Parallel imports and exhaustion of rights

Normally, any trade, including import and export, of branded goods (e.g. goods bearing a registered trademark) can only be done with permission of the owner of the IPR. This permission is typically given to a licensed distributor. Parallel importing is where genuine IP-protected goods – not counterfeits – are imported from one territory into another . Problems arise if the territory into which the goods are imported is meant to be the exclusive sales territory of a specific licensor and not the importer.

While the default position should be that any imports and exports need the IPR owner’s permission, the EEA adopts a rule known as exhaustion of rights. This states that where the branded goods are sold in one EEA country with the IPR owner’s permission, those goods can lawfully be sold or imported/exported into any other EEA country without seeking any further permission.  In other words, once placed on the market in the EEA the right to prevent the further onward sale of those goods are exhausted. This means that ownership of a registered trade mark in the UK cannot by itself stop the sale of genuine goods bearing that trade mark, into the UK from the EEA.

The Brexit impact

Prior to Brexit, IPR-protected goods that were sold legally in the UK could (subject to any contractual limits set by the IPR owner) be freely exported to any other EEA country under the exhaustion of rights rules, and vice versa.

The legal position following Brexit however, created a more uneven legal position.

Branded goods sold in the UK can no longer be freely exported to the EEA without permission, as the IPRs are no longer considered exhausted within the EEA by being placed on the UK market. UK businesses looking to export branded goods into the EEA now need to seek the permission of the IPR owner(s) in the EEA to export these, with the risk that the IPR owner may refuse that permission and prevent the export.

Owners of IPR in the UK cannot, however, wield this same power over branded goods imported into the UK. This is because IPR in branded goods sold in another EEA country by, or with the consent of the IPR owner in that country are still deemed to be exhausted in the UK, and so can still be freely imported for sale in the UK market even without the UK IPR owner’s permission.  

This poses particular issues for UK exclusive distributors of branded goods because goods sold under the brand elsewhere in the EEA can still make their way legally to the UK market via import, undermining the distributor’s exclusivity. It similarly risks reputation damage to brand owners by undermining their exclusive distribution channel, through which a brand owner would typically control its brand prestige and reputation in the UK.

In 2021-22, the UK government ran a consultation to address this legal mismatch but concluded that there was not adequate grounds to justify changing the approach, despite its impact on brand owners and exclusive distributors. The government noted in its response that “any change to the exhaustion of rights framework for the UK has the potential to affect many business sectors and consumers“.

What Businesses Can Do

As the legal position on parallel imports is not expected to change in the medium term, it is vital that any distribution agreement granting exclusivity in the UK is looked at carefully, and suppliers use the tools at their disposal to identify, prevent and deter parallel imports.

For UK exclusive distributors

Exclusive distributors should always request the right to pursue any claims for third party IPR infringement. This is because, although importing is allowed without the IPR owner’s consent, the use of a UK-registered trade mark in UK advertising without consent of that trade mark’s owner is still unlawful. The UK Supreme Court has confirmed that this applies to parallel import sales as well as to sale of counterfeit goods. An exclusive UK distributor with a right to bring claims for trade mark infringements on behalf of the IPR owner can use this right to demand a stop to any advertising of goods in the UK that might lead to a parallel import. This can help to reinforce their exclusivity.

For suppliers appointing exclusive distributors

• Suppliers appointing a series of separate exclusive distributors across different countries should ensure that their agreements allow each distributor to sell the supplier’s goods in their designated territory, but not into other specific territories where the Supplier has granted exclusivity to another distributor.  Such contracts should also build in remedies if these divisions are contravened, for example rights for the Supplier to terminate or remove a distributor’s exclusivity. This would allow a Supplier contractual recourse against a distributor who parallel imports goods. Additionally, contracts should control what a distributor can do with excess stock held by it upon termination, or (for industries with seasonal stock changes) at end-of-season.
• Beyond the contract, suppliers can also use commercial tools to monitor the market, to ascertain whether parallel imports are happening and if so, how many. Investigative tools can indicate price and origin of goods; while identifying products with tell-tale packaging or labelling differences might demonstrate that they originated outside the UK market.
• Suppliers can also seek to influence the buy-side of parallel imports by incentivising customers to shop through the Supplier’s authorised distribution channels instead. This aims to deter customers from buying parallel imports, so reducing demand for such imports. Popular incentives include loyalty schemes for shopping through authorised channels, or offering a customer service that exceeds what is offered by the parallel importers. By creating a customer service culture or rewarding loyalty, a Supplier can enhance its brand far beyond the products that are being parallel imported.

For further information please contact Rebecca Cooper on 01494 932614 or email rac@blasermills.co.uk.

The FIFA World Cup is kicking off in Qatar on 20 November with the final being set for just a week before Christmas. The World Cup historically takes place during the summer, however, due to heat concerns in the host country, has been rescheduled for the cooler winter on this occasion.

Such unique timing, overlapping both Black Friday and Cyber Monday in the run-up to Christmas, may well bring tidings of joy for retail businesses in the U.K., with Qatar, calculated by Bloomberg to make $20 billion off the event, not being the only giftee this holiday season.  

It’s beginning to look a lot like Christmas  

Both Currys, British electrical retailer, and John Lewis, British department store chain, have revealed that they’re anticipating surges in TV sales in the coming months, as well as in other areas of technology such as projectors and sound systems, with the two biggest drivers of TV sales (Christmas and the World Cup) culminating in an England match on Black Friday. 

Big sales are also expected in groceries, with both celebrations of Christmas and football focusing largely on food and drink. Waitrose, British supermarket chain, confirms that their Christmas food lines are designed with both festive and football audiences in mind, and has brought festive food and drink sales forward (the chain revealed their Christmas range in August) to manage increased sales.  

Retailers and suppliers should be preparing for demand, therefore, ensuring supply contracts are negotiated, agreed and in place as soon as possible, as well as reviewing any already in place.   

Indemnity clauses  

A contentious part of most supply contract negotiations is the indemnity clause.  

An indemnity is a promise by one party (the indemnifying party) to reimburse the other party (the indemnified party) for its financial losses if a trigger event occurs. The promise is made when the parties agree that it would be unfair for the indemnified party to bear the resulting losses.  

Indemnity clauses should be tailored to the specific supply contract, and both parties should consider the following when drafting:  

• Trigger  

The event that triggers payment must be clear. This is usually an event over which the paying party has control, so that it is fair for the liability to sit with them. The indemnifying party may want to negotiate excluding events outside of their control, or for which they are not to blame. For example, an act of God, or a loss caused by the other party’s negligence.   

• Loss 

The loss needs to be quantifiable. A well-negotiated indemnity should balance both parties’ interests. For example, the indemnifying party may want the loss to be covered by their insurance, and the indemnified party may want to cover a specific loss in full.   Sometimes, the amount to be paid cannot be known until the indemnified party’s liability is assessed in court (e.g., where the indemnity uses the word ‘claims’, ‘damages’ or ‘judgment’. 

• Causation  

Often, the indemnifying party’s duty is to pay for loss directly and solely caused by the trigger. A wider or narrower casual link may be negotiated, however. For example, “in connection with”, may be interpreted as the widest causal link between trigger and loss. The contract may also state that the loss has to be ‘foreseeable’.  

• Mitigation 

If the indemnity relates to reimbursement of damages (e.g., for breach of contract) the protected party usually has a duty to mitigate their losses. However, indemnities can be drafted to avoid this duty to mitigate. 

• Proof of loss 

The indemnified party must prove what payment is due under the contract. This normally involves providing the fact and amount of the loss specified in the indemnity. Express wording can be negotiated, however, to depart from this. For example, the parties may negotiate that the indemnified party’s statement of the amount due will bind both parties.   

• Exclusion of other claims 

A party might indemnify another against loss arising from the indemnifying party’s breach of contract. The indemnifying party may also be liable to pay damages for that breach of contract. The contract should state whether the indemnified party may pursue only one claim, or both claims in the alternative, although there will be no double recovery.  

• Capping liability 

The parties to a contract may agree a ‘limitation of liability’ clause which limits their maximum potential liability to the other party. The parties need to decide whether the indemnity is included under this cap or not. It is common for liability under indemnities to be uncapped. 

Because indemnities are very onerous clauses, they are ‘strictly interpreted’ by the courts. This means that there is less leeway if the indemnity is poorly worded, and it is important to get it right. 

Don’t get caught in the cold  

For help and advice on supply contracts, to include indemnity clauses, please contact our commercial team by calling on 020 3814 2020, emailing us at enquiries@blasermills.co.uk, or filling in our contact form. 

*Please note that this article does not constitute as legal advice and should not be taken as such* 

During New York Fashion Week September 2022, Kourtney Kardashian, American media personality and socialite, launched two ‘sustainability-focused’ capsule collections with Boohoo as their new Sustainability Ambassador, in what was quickly criticised as a greenwashing stunt by the fashion company.

“Greenwashing” is the term used to describe false, misleading, overstated or unsubstantiated advertising claims made by a company about the environmental impact of their products or behaviours. Proven cases of greenwashing can amount to a breach of English consumer protection laws, which provide security to the consumer against mis-selling when purchasing a product.

Boohoo was named as one of the least sustainable fashion brands by the UK Parliament’s Environmental Audit Committee in 2019. The appointment of Kardashian and the associated products launch are widely considered to be case of a recognised unsustainable business seeking to greenwash its customers. There is a strong case to argue that Kardashian was an unsubstantiated choice for a Sustainability Ambassador given her highly publicised lifestyle which includes the use of private jets and supercars.

Furthermore, while 41 of the 45 products included in the new range may contain a percentage of recycled fibres, the collection itself makes up less than 0.1% of products available on the Boohoo website. At its core, the company’s output comprises “fast fashion”, a practice that produces over 92 million tonnes of waste each year.  

The Competition and Markets Authority (CMA) is currently exploring the sustainability claims made to UK consumers by Boohoo (as well as by ASOS and George at Asda) about their fashion products as part of its ongoing investigations into potential greenwashing.  

The investigation includes looking at the use by Boohoo and others of statements and language that creates the impression that products are more environmentally sustainable than they actually are.

CMA’s chief executive, Sarah Cardell, said: “People who want to ‘buy green’ should be able to do so confident that they aren’t being misled.”

How to make compliant green claims

Advertising is regulated by a combination of legislation and self-regulation. The main legislation controlling the claims made in advertising and prohibiting misleading information is the Consumer Protection from Unfair Trading Regulations 2008.

In September 2021, the CMA published its Green Claims Code (Code) and accompanying guidance, to help companies understand and comply with consumer protection law when making environmental claims.

The Code sets out six principles specifying that environmental claims must:

1. Be truthful and accurate;
2. Be clear and unambiguous;
3. Not omit or hide material information;
4. Only make fair and meaningful comparisons;
5. Consider the full lifecycle of the product or their service, and;
6. Be substantiated.

More information

For more information, or for help and advice on a range of company commercial matters, including consumer facing terms and conditions, please contact our commercial team by calling on 020 3814 2020, emailing us at enquiries@blasermills.co.uk, or filling in our contact form.

*Please note that this article does not constitute as legal advice and should not be taken as such*