TRW Ltd v Panasonic Industry Europe GmbH [2021] EWCA Civ 155...

Facts

• TRW Ltd and Panasonic Industry Europe GmbH negotiated a contract for the supply of car parts.
• Both companies exchanged their standard terms and conditions, each proposing conflicting terms.
• The final set of terms was sent by Panasonic before work commenced.
• Disputed terms included liability limits, which were considered central to the contract.
• The context involved assessment of industry standards and prior dealings between the parties.

Issues

1. Whether the "last shot" rule determined which party's terms became binding in the context of conflicting standard terms.
2. Whether terms that differ substantially from previous negotiations require explicit and clear acceptance to become part of the contract.
3. How courts should assess the impact and significance of changes to contractual terms in the "battle of the forms."

Decision

• The Court of Appeal held that the "last shot" rule generally applies, meaning the last terms sent prior to performance are normally binding.
• However, the Court introduced an exception: when new terms represent a major change from earlier negotiations, acceptance of those terms must be explicit and clear, not merely inferred from commencement of work.
• The Court evaluated contested terms by considering their significance to risk allocation and the context of industry norms and past dealings.

Legal Principles

• The traditional "last shot" rule applies: the last set of terms before performance typically forms the contract.
• Substantial changes to contractual terms require express agreement from the counterparty; acting alone on such terms does not imply acceptance.
• Determining the materiality of changes relies on contextual analysis, giving particular attention to terms that affect core aspects like liability.
• Clarity in negotiating and accepting contractual terms is necessary to avoid unintended incorporation of unfavorable provisions.

Conclusion

The Court of Appeal in TRW Ltd v Panasonic Industry Europe GmbH affirmed the general application of the "last shot" rule in contractual disputes involving conflicting terms, but clarified that major changes require clear and explicit consent to be incorporated. This decision highlights the necessity for unambiguous acceptance, especially regarding significant or risk-altering contractual provisions.