TRW Ltd v Panasonic Industry Europe GmbH [2021] EWCA Civ 1558

In a 'battle of the forms' dispute, TRW purchased goods from Panasonic. The Court of Appeal held that TRW's conduct in accepting delivery of the goods constituted acceptance of Panasonic's counter-offer, thereby incorporating Panasonic's standard terms, including a German jurisdiction clause.

Facts

The claimant, TRW Ltd (‘TRW’), an English manufacturer of automotive parts, purchased resistors from the first defendant, Panasonic Industry Europe GmbH (‘Panasonic’), a German company. TRW initiated the transaction by sending purchase orders which referred to its own standard terms (which included an English jurisdiction clause) but did not attach them. In response, Panasonic sent an order confirmation which explicitly stated that the contract was subject to its own attached ‘Delivery and Payment Conditions’. These conditions contained a clause specifying German law and the jurisdiction of the Hamburg courts. A dispute arose when TRW alleged the resistors were defective and brought a claim against Panasonic in the English courts. Panasonic challenged the jurisdiction, arguing that the contract was formed on its terms, including the German jurisdiction clause.

Issues

The central legal issue was to determine which party’s standard terms governed the contract in a classic ‘battle of the forms’ scenario. The key questions for the court were:

1. Did the differing terms on jurisdiction prevent the formation of a contract?
2. If a contract was formed, which party’s terms were incorporated?
3. Specifically, did TRW’s conduct in taking delivery of the goods, after receiving Panasonic’s order confirmation with its attached terms, amount to an acceptance of Panasonic’s counter-offer?

Judgment

The Court of Appeal, led by Lord Justice Coulson, unanimously dismissed TRW’s appeal and upheld the High Court’s decision in favour of Panasonic. The court affirmed the traditional English common law approach to the ‘battle of the forms’.

Reasoning of the Court

The court’s reasoning was firmly rooted in the principles of offer and acceptance. TRW’s purchase order was considered an offer. Panasonic’s order confirmation, which introduced new terms and conditions materially different from TRW’s, was not an acceptance but a counter-offer. The critical question then became whether TRW had accepted this counter-offer.

The court held that TRW’s conduct of accepting and taking delivery of the resistors, without any prior explicit objection to Panasonic’s terms, constituted acceptance of the counter-offer by conduct. This analysis relies on the ‘last shot’ doctrine, where the terms sent by the last party to make a proposal before performance of the contract commences are deemed to govern the contract. Lord Justice Coulson stated:

In my view, the conduct of the buyer, in taking delivery of the goods, was an acceptance of the seller’s counter-offer. The reasonable person in the position of the seller would have had no doubt that the buyer was accepting the goods on the seller’s terms and conditions.

He further clarified the application of the ‘last shot’ rule:

It seems to me that this is a classic case for the application of the ‘last shot’ doctrine. The seller made a counter-offer by sending its order confirmation, and the buyer accepted that counter-offer by taking delivery of the goods. In those circumstances, the contract was concluded on the seller’s terms and conditions.

The court explicitly rejected TRW’s argument that its uncommunicated subjective intention was to contract only on its own terms. The test for acceptance is objective: how a party’s conduct would appear to a reasonable person in the position of the other party. The court also dismissed the relevance of the UN Convention on Contracts for the International Sale of Goods (CISG) and its ‘knock-out’ rule, confirming that the traditional English analysis based on *Butler Machine Tool Co Ltd v Ex-Cell-O Corporation (England) Ltd* remains the applicable law.

Implications

This decision is a significant reaffirmation of the ‘last shot’ doctrine in English contract law regarding the ‘battle of the forms’. It serves as a clear warning to commercial entities that proceeding with a transaction (e.g., accepting delivery of goods) after receiving a counter-offer containing the other party’s terms will likely be treated as acceptance of those terms. The ruling underscores that a party’s subjective intentions are irrelevant; what matters is their objective conduct. The judgment solidifies the divergence between the English common law approach and the ‘knock-out’ rule used in other legal systems, providing certainty but also highlighting the potential pitfalls for businesses that fail to carefully manage their contractual negotiations.

Verdict: The appeal was dismissed. The contract was found to have been made on the defendant’s (Panasonic’s) terms, and therefore the German jurisdiction clause was effective.

Source: TRW Ltd v Panasonic Industry Europe GmbH [2021] EWCA Civ 1558