Contract Law Practice Test

In a battle of forms between two businesses, how would the courts determine whether a contract exists and which terms govern it?

There is a valid contract which is governed by the manufacturer's terms and conditions as they are the offeror.

There is a valid contract which is governed by the last set of forms sent before performance of the obligations began.

When two businesses exchange forms with different terms, courts look at whether a contract actually formed despite the mismatched boilerplate and, if it did, whose terms control. In a battle of forms, the controlling idea is that a contract can exist even when the forms don’t perfectly align, and the terms that govern are typically those in the last form exchanged before performance begins. This “last form” rule reflects the parties’ most recent stated agreement and intent at the moment performance starts; once they begin performing, their actions can bind them to the terms they last agreed on. If one party objects to any terms within a reasonable time, those terms may be excluded; if terms are missing, the UCC provides gap-fillers to complete the contract.

So the contract is valid and the governing terms are those on the last form exchanged before performance starts, rather than automatically being the terms of the first offeror or the first form, and without requiring perfect agreement on every term.

There is no contract as the parties are not in agreement.

There is no contract because the second set of terms and conditions supplied by the customer would constitute a counteroffer, which would destroy the offer originally made.