The Battle Of The Forms

The battle of the forms – negotiating a settlement to retain the client

A ‘battle of the forms’ arises when two businesses are negotiating the terms of a contract and each party wants to contract on the basis of its own terms. So, for example when a recruiter sends their terms of business to a client, the client may respond appearing to accept the offer, but may attach their own terms or framework agreement. In most cases the legal ‘battle’ is won by the party who sent their TOB’s last, provided they were not rejected by the recipient.
In this case our client, an executive search agency specialising in investment banking asked us to resolve a dispute they were having with one of their French clients. They asked us to pursue an invoice, but in such a way that would retain their valued client, giving us permission to accept a settlement if need be.

The search agency had sent terms to the client and agreed to work on a vacancy, but then out of the blue the client sent an email to the director of the search agency with their own contract, or ‘Master Agreement’. The search agency responded to the email with ‘I will revert once I have reviewed.’

The agency introduced several candidates but none were engaged at the time. A year later however, the agency discovered that the client had engaged one of the candidates 11 months after introduction, still within the period in which they could invoice.

The search agency approached the client, raising an invoice and pointing out that they were due a fee for the engagement. The client responded that under the ‘Master Agreement’, no fee was due as there was a 6 month limit rather than the 12 months’ under the agency’s terms. The search agency disagreed that the ‘Master Agreement’ had been accepted, but the client insisted that it did apply.

The agency had used Sterling in the past, usually in cases where they had no intention of continuing to do business with the debtor. In this case they wanted Sterling to liaise with the French client, but retain their customer relationship if possible, to protect a pipeline of future business.

Sterling took this on board and contacted the debtor to start discussions. As a third party, we were able to discuss the history of the case with them in a calm and factual manner. We explained that, since the search agency had not yet ‘reverted’ on the ‘Master Agreement’, those terms could not be in place, and the agencies terms continued to apply. After much discussion by phone and email, Sterling was able to negotiate a settlement between the two parties of 50% of the fee. This allowed the French client to save face, whilst accepting that the agency had capitulated out of good will. Our client got to maintain the relationship whilst receiving a settlement they were happy with (and probably more than they would have ended up with if they had been forced to go through an expensive litigation process).

The search agency in this case was lucky that they had responded to the ‘Master Agreement’ in the way they had. Often in these situations the party receiving the terms will simply ignore them, not appreciating that by not rejecting them, they may well apply rather than their own.