Shared Framework Supremacy: Scottish Court Affirms Framework Terms Override Competing Standard Conditions in “Battle-of-Forms” Cases

Introduction

The Inner House of the Court of Session in Caledonia Water Alliance v Electrosteel Castings (UK) Ltd ([2025] CSIH 21) has delivered a significant judgment clarifying the interaction between automated “battle-of-forms” exchanges and overarching framework agreements in Scottish contract law. The dispute stems from a £35 million claim by Caledonia Water Alliance (“Caledonia”) for alleged supply of defective ductile-iron pipework by Electrosteel Castings (UK) Ltd (“Electrosteel”), compromising the South Edinburgh Resilience Scheme—an infrastructure project carried out under Scottish Water’s supply framework.

Electrosteel challenged the Scottish court’s jurisdiction, contending that its own standard terms—deployed automatically on order confirmations—gave exclusive jurisdiction to the English courts. Caledonia, conversely, maintained that the contracts were governed by Scottish Water’s framework terms (Scots law and Scottish courts). The commercial judge preferred Caledonia’s argument and repelled the jurisdiction challenge; Electrosteel reclaimed (appealed).

The Second Division (Lords Justice Clerk, Malcolm & Armstrong) has now refused the reclaiming motion, endorsing the commercial judge’s approach and fortifying a new precedent: where both parties transact under a shared industry framework and objectively intend that framework to govern, mere pro-forma references to competing standard conditions—generated by automated procurement systems—will not displace the framework, even in a classic “last-shot” scenario.

Summary of the Judgment

The court upheld the commercial judge’s finding that both parties had a common, objectively ascertainable understanding that the Scottish Water framework—rather than either party’s bespoke terms—governed their 60 supply contracts.
The automated inclusion of each side’s standard terms in purchase orders and order confirmations did not evidence an intention to contract on those terms; instead, those references were “ignored” by the parties in practice.
Applying Tekdata principles, the court held that the traditional offer-and-acceptance “last shot” rule is not sacrosanct; it can be displaced when documentary and contextual evidence yields a “necessary inference” that other terms were intended to prevail.
Consequently, Clause 30 of the Scottish Water framework (Scots law, Scottish courts) prevails, the Scottish Court of Session has jurisdiction, and the case returns to the commercial roll for determination on the merits.

Analysis

Precedents Cited and Their Influence

The court wove together a range of Scottish and English authorities. Key references include:

RTS Flexible Systems Ltd v Molkerei Alois Müller GmbH & Co KG [2010] 1 WLR 753: Emphasised the objective construction of parties’ communications when discerning contractual terms.
Tekdata Interconnections Ltd v Amphenol Ltd [2009] EWCA Civ 1209: Confirmed the primacy of the traditional offer-and-acceptance analysis but acknowledged a “high hurdle” for displacing it where a contrary intention is established by necessary inference. The Inner House relies on this flexibility.
Specialist Insulation Ltd v Pro-Duct (Fife) Ltd 2012 SCLR 641, TRW Ltd v Panasonic Industry Europe GmbH [2021] EWCA Civ 1558 and Baillie Estates Ltd v Du Pont (UK) Ltd [2009] CSOH 95: Illustrate circumstances in which courts scrutinise the whole course of dealings rather than mechanically applying the “last shot”.
Continental Tyre & Rubber Co Ltd v Trunk Trailer Co Ltd 1985 SC 163 and McCutcheon v David MacBrayne Ltd 1964 SC (HL) 28: Scottish authorities confirming that courts must ask whether, objectively, parties intended the purported terms to apply.
Luminar Lava Ignite Ltd v Mama Group plc 2010 SC 310: Emphasised the need for mutual knowledge of facts relied on in contractual construction.

By synthesising these precedents, the Inner House crafted a single proposition: automated references to standard terms cannot override a demonstrably shared framework intention, and the evidential hurdle—while significant—is not insurmountable where facts are cogent.

Legal Reasoning

Objective Common Intention
The court accepted the commercial judge’s factual findings that (a) both parties knew the supplies fell within Scottish Water’s framework, (b) prices were calculated at framework rates, (c) Electrosteel’s own “supplier guide” stated non-deviation from framework terms, and (d) the parties’ conduct—rebates, invoice coding, attendance at framework meetings—aligned exclusively with the framework.
Hence, a reasonable person in the parties’ shoes would infer that Scottish Water terms applied.
Displacing the “Last Shot” Rule
While Electrosteel’s order confirmations were the “last shot” in the document exchange, the court—applying Tekdata—declined to enforce those terms because the broader matrix of fact produced the “necessary inference” that both sides intended otherwise.
Automated Documentation is Not Decisive
The inclusion of standard terms was characterised as an automatic, unthinking systems process; the court held that automation does not create binding intention when contradicted by the parties’ actual expectations and performance.
High—but Achievable—Evidential Threshold
The Inner House acknowledged reservations about the “high hurdle” language in Tekdata, but nevertheless found it satisfied given the compelling evidence.
Jurisdictional Consequence
Because the framework conferred exclusive jurisdiction on Scottish courts, the reclaiming motion was refused and the Court of Session retained seisin of the merits.

Impact on Future Cases and Scottish Contract Law

This decision has broad ramifications:

Framework Agreements Elevated – Parties operating within industry-wide frameworks (utilities, construction, public procurement, defence) must recognise that such frameworks can legally trump contradictory boiler-plate terms, even if those terms are the “last” documentation exchanged.
Automation vs. Intention – Businesses relying on automated procurement software need to re-evaluate whether default annexation of standard terms delivers the intended legal outcome; “set-and-forget” may no longer suffice.
Jurisdictional Certainty – The ruling promotes consistency within multi-jurisdictional supply chains by validating the parties’ conscious alignment with framework-mandated forums.
Evidence-Gathering Guidance – The judgment underscores the evidential factors that can displace the last-shot doctrine: supplier guides, framework documentation, rebate arrangements, pricing structures, and witness concessions.
Convergence with English Law – Scots law is affirmed as broadly compatible with the flexible reading of Tekdata, albeit with a nuanced emphasis on the parties’ real conduct and industry custom.

Complex Concepts Simplified

Battle of the Forms: A situation where each contracting party seeks to impose its own standard terms. The “last shot” doctrine normally gives precedence to the last set of terms sent before performance.
Framework Agreement: A master agreement—often in public procurement—setting prices, specifications, and terms that all call-off contracts must follow.
Offer and Acceptance Analysis: The classical method of identifying when a contract is formed: one party’s offer is accepted (expressly or by conduct) by the other.
Reclaiming Motion: Scottish term for an appeal from the Outer House of the Court of Session (commercial judge) to the Inner House.
Necessary Inference / High Hurdle: Language from Tekdata indicating that strong, cogent evidence is needed to rebut the presumption that the last exchanged terms govern.
Automatic / Pro-forma Documentation: Standardised documents generated by an electronic system without bespoke review; here, purchase orders and order confirmations automatically appended standard terms.

Conclusion

Caledonia Water Alliance v Electrosteel solidifies a pragmatic, commercially sensitive doctrine within Scots law: when parties knowingly operate inside a common framework, that framework’s terms prevail over contradictory boiler-plate, notwithstanding the sequence of automated forms. The decision harmonises Scottish jurisprudence with modern commercial realities—particularly the prevalence of e-procurement platforms—while offering clear guidance on the evidential threshold for displacing the “last shot”. Practitioners should advise clients engaged in framework-based supply chains to audit their procurement processes, ensure alignment between intention and documentation, and anticipate that Scottish courts will look beyond pro-forma exchanges to the parties’ genuine commercial context.