Question

(Business Law)

Explain the UCC's "battle of the forms" rule.

Answer 1

Uniform Commercial Code's (UCC) controls agreements which are made for purchase and sale of goods and services. 'Battle of the forms' rule, relates to usage of pre-printed forms in such contracts and resolution of dispute, should any arise at a future time.

Generally, owners of small businesses tend to avoid writing their own contracts, such as order acknowledgement form, purchase orders, etc. Instead, to save time and to avoid the effort involved in writing the contracts afresh, they use pre-printed versions of these forms. These forms contain a long list of pre-determined legal terms and conditions which may or may not be fair to both the parties to the contract. Additionally, the parties to the contract may add a few terms to the contract without signing the documents or providing evidence of agreement to additional terms. If a dispute arises later, it has the potential to be mired in uncertainty and conflict because of the one sided terms and the additional terms.

UCC's battle of the forms rule are special rules for resolving disputes involving conflicting terms. If the parties to the contract are considered merchants (regular dealers in transactions of goods and services) then additional terms in the contract become a part of the contract unless there is a clause which limits the terms to those included in the contract, a party objects in reasonable time or additional terms alter the contract, materially. A change in price, quantity, warranty, legal remedies, etc. are considered to be material alteration of the contract.

If neither or a single party is a merchant, then additional terms do not become binding. They are considered proposals or offers. If there are different terms, they become part of the contract.

It is best to avoid battle of the forms, by forming an agreement that would supersede those forms.