Many small and medium-sized business owners use preprinted purchase orders, order acknowledgments or delivery receipt forms. Many of these forms can be obtained on the internet. However, while convenient, the forms are dangerous to use. Many of the preprinted forms obtain on the internet or from forms providers come with detailed legal terms written in small print on the back of the form. This is usually called “boilerplate language.” However, it can get the user in trouble if not used properly.
Under general rules of law, when a business sends over a form to a supplier (e.g., a purchase order) via email or fax, but the supplier responds by sending over another form (e.g., an order confirmation), the parties may believe that they have a contract, but actually do not. Under the “mirror image rule”, no contract is formed when the parties exchange forms that are different. While this only applies to transactions involving services, under common law if the terms and conditions of the forms do not match, then the parties run the risk that the last form exchanged between them would apply, so that the supplier, for example, would not get the benefit of using the preprinted form.
If the transaction involves the sale of foods, then Article 2 of the Uniform Commercial Code (UCC) applies and under the UCC, this exchange of preprinted form results in all of the terms being accepted and inconsistent or conflicting terms and conditions would cancel each other out. Therefore, in order to avoid this result, the parties need to include special language in their forms. For example, we advise our clients that their form should state specifically that their preprinted form is the only form that governs regardless of whether another form is used by the counterparty. Set forth below is some of the language that we incorporate in the “preprinted forms”:
If the buyer (the “Buyer”) accepts the terms and conditions of this order confirmation (the “Order Confirmation”), the terms and conditions set forth below shall govern the relationship between the parties.
Additional terms included in the preprinted form (in the case of a seller of goods) would be that later payments will incur interest and that if the seller is required to pursue collection in the courts, then reasonable costs and attorney’s fees will be paid by the buyer.