OUTER HOUSE, COURT OF SESSION
 CSOH 95
OPINION OF LORD HODGE
in the cause
BAILLIE ESTATES LIMITED
DU PONT (UK) LIMITED
Act: Weir; Morton Fraser, Solicitors
Alt: Cormack, Solicitor advocate; McGrigors LLP
30 June 2009
 Baillie Estates Limited ("Baillie") trade as "Baillie Signs" and design and manufacture signs in Scotland. Du Pont (UK) Limited ("Du Pont") are the United Kingdom subsidiary of a well-known American corporation and have their registered office and principal business premises in Stevenage, Hertfordshire. In about 2006 Du Pont promoted a new product, namely a Cromaprint 22 uv printing machine, which they sought to sell in the United Kingdom market. Baillie purchased such a printing machine in November 2006. They have not been satisfied by its performance and have asserted a right to reject the machine on the ground that it was not of satisfactory quality or fit for purpose under section 14 of the Sale of Goods Act 1979 (as amended). In this action Baillie seek, among other remedies, a declarator that they are entitled to reject the printing machine.
 Du Pont have lodged defences in which they aver that they are not subject to the jurisdiction of this court. They base their plea of no jurisdiction on their standard terms and conditions of sale. Clause 28 of those standard terms provides:
"These conditions shall be subject to and shall be construed in accordance with the Laws of England. The Courts of England shall have exclusive jurisdiction over any dispute which may arise hereunder, unless the parties agree otherwise in writing."
Baillie do not assert that the parties have agreed to prorogate the jurisdiction of the Scottish courts. Their case is that the parties did not incorporate Du Pont's standard terms into their contract. They rely as a ground of jurisdiction on the place of performance of the obligation to deliver a suitable printing machine.
 I have therefore heard a preliminary proof on the circumstances in which the parties entered into the contract of sale in order to determine whether Du Pont's standard terms have been incorporated into the contract and thus whether this court has jurisdiction to hear this case. The pursuers' witnesses were Mr Derek Minto and Mr Mark Baillie and the defenders' witnesses were Mr Richard Payne and Mr Geoff Lewis.
The background to the contract
 In 2006 Baillie used a solvent printer to print the signs which they manufactured. Contact between the parties commenced in early June 2006 when Mr Geoff Lewis, one of Du Pont's sales representatives, approached Baillie to promote their uv printing machine. When he visited Baillie's premises at Queensferry Road, Edinburgh, Mr Lewis saw their workshop where they would locate the printing machine if they acquired one. On about 5 June 2006 Mr Lewis sent Baillie an email with an outline proposal, which included the option of a finance package to allow Baillie to acquire the machine by paying a monthly rental under a hire purchase or lease agreement. Baillie became more interested in acquiring a uv printing machine after another supplier, B & P Lightbrigade Group Limited, approached them with an offer to supply a rival machine. On 27 June, at Baillie's request, Mr Lewis sent them another copy of his proposal.
 In October 2006 Baillie visited the premises of B & P Lightbrigade to see their Anapurna printing machine. On 2 November 2006 Derek Minto, the associate director of Baillie, sent an email to Mr Lewis in which he asked him to confirm the best price and deal that Du Pont could offer on their printing machine and informed him that Baillie were tempted by an offer from B & P Lightbrigade of a cash deal under £95,000. Mr Lewis replied the same day by an email, to which he attached a paper entitled "How Cromaprint lowers cost". He agreed to give a demonstration of the machine on 16 November. He stated that he would make "a final proposal covering all of the points we find directly after our demonstration". Mr Lewis sent further proposals by emails dated 10 and 13 November 2006. On Monday, 13 November 2006 Marion Goodridge-Payne of Du Pont forwarded to Mr Minto and his colleague, Mr Mark Baillie, an internal Du Pont email in which Mr Lewis informed Mr Jim Walker, his supervisor, that he had backed away from finance offerings in his final proposal and that he expected "to have this closed end of this week/beginning of next week".
 On Thursday, 16 November 2006 Mr Mark Baillie and Mr Minto visited Du Pont's offices at Stevenage at which Mr Lewis and Mr Michael Banks demonstrated the operation of the printing machine. During the morning Du Pont's engineers faced some difficulties in achieving the needed opacity when they used white ink in the printing machine; but they appeared to have resolved the problem during the lunch break.
 On Friday, 17 November 2006 at 11.55 hours Mr Lewis sent Mr Minto an email to which he attached a further proposal. He apologised that the document was longer than they had planned and had taken longer to put together. He stated that he would call "in a couple of hours" but invited Mr Minto to phone him on his mobile or at Stevenage if he had any questions. The proposal was in the following terms:
Thank you for visiting our facility yesterday, I hope you found the visit informative and useful. As discussed please find our revised proposal below to attempt to reconcile the phasing of payments for the Cromaprint 22uv.
We propose to supply the system to reach your price requirement as follows:
This price is reduced by the actions detailed below, however, there remains the issue of phasing of the payments, as money coming out of your bank earlier means the loss of interest.
We therefore propose the following phased payments.
Target Installation date: 4th December 2006 (to be confirmed following survey)
Initial payment of £95,200 2nd March 2007
Final payment of £16,800 1st May 2007
Calculation of lost interest on money otherwise on deposit.
£112,000 - £75,000 = £37,000, reducing over one year as ink is consumed.
Interest lost assuming deposited at 5%.
To allow for this loss we propose to supply the Gretag eye one Spectrophotometer normally £1,150 within the price of £112,000.
Materials without cost supplied as follows:
We will reduce the real price of the system by supplying 336 litres of ink free of charge over the course of the first year of operation.
This equates to 12 sets of ink ( 7 colours @ 4 litres per container = 28 litres) delivered as follows:
2 sets delivered with the machine for start up, together with 2 packs of cleaning solution and one spare u.v. lamp. (£444.45).
1 set per month thereafter, with the proviso that one set is purchased per month. This will happen for the next 10 months, or longer or shorter depending on your consumption of the ink.
Aim is to have all 'free' sets of ink delivered within 12 months from installation.
While the above wording covers sets of inks, it is perfectly acceptable to order individual colours to allow for the fact that the inks are consumed in a non uniform way. Matching colours will be delivered free of charge as per sets of ink.
This means a reduction of 336 x 108.78 = £36, 550.08 2 sets of cleaning solution £466.18 and one u.v. lamp (£444.45) Total reductions £37, 460.71.
Which means a real price of the equipment of £74, 539.29.
Finally we also include one roll of Each of the following substrates:
DuPont Melinex clear
DuPont Melinex Metallised
DuPont Melinex light block banner
DuPont Tyvek 1071
DuPont tyvek Brillion
How much is ink
Ink for any colour costs £108.78 per litre. (which compares favourably with the 440ml = £50 proposed elsewhere = £113.63 per litre).
[The document then set out the offer prices of various inks and cleaning solutions.]
The system proposed is X-demonstration (installed 30-10-06) and is supplied complete with;
CromaprintTM 22uv print engine
Feed roll and tables for rigid substrates
Cromanet CS controlling workflow management software
Cromanet CS colour management software
PC Hardware (Dell Precision Server, 2 x 3.6GHz processors 2Gb RAM, Windows)
On site or off site training for up to three operators.
12 months all inclusive warranty (covers print heads)
Specific commitments on performance made at demonstration.
1. the machine will be supplied complete, this means with panels, driven take up roll, and rear air gun. It will be an 'as new' machine in all respects except for its small amount of usage.
2. The performance of the White ink is addressed with the Nuvo 3 formulation of white ink. This has superior adhesion and opacity properties that are extensively tested. We also believe it has reduced tendency to separate out (The titanium dioxide coalesces) in the container.
 Mr Lewis then telephoned Mr Minto, who explained that he had to consult with Mr Baillie before responding. Mr Lewis did not remember the telephone call with any accuracy but thought that he had told Mr Minto to email him if Baillie wanted to go ahead and have the machine installed. Having considered the proposal with Mr Baillie, Mr Minto emailed Mr Lewis at 17.16 hours on 17 November 2006 with the terse message: "Go ahead." In response Mr Lewis emailed Mr Minto at 12.35 hours on Sunday, 19 November and stated, "It's on the way. See you tomorrow. Thanks again."
 On Monday, 20 November Mr Lewis visited Baillie's premises at Queensferry Road, Edinburgh. He again saw the workshop area and was shown the area designated to house the machine. But he wished to have a Du Pont engineer inspect the area of the proposed print room. At 13.45 hours on 20 November Mr Lewis sent Mr Minto an email, which he copied within Du Pont to Mr Michael Banks and Mr Jim Walker, in which he stated that they were "all underway" and that they should have a site survey of Baillie's premises at the end of the week. The message continued: "I need to send you our exciting standard terms and conditions of sale, which should help if you have any insomniac tendencies. These also feature on the back of all our invoices should you be unlucky enough to lose this set, and wish to refer to them." He also thanked Mr Minto for the order.
 Mr Minto explained in his evidence that he thought that the contract had been concluded when he accepted the proposal on 17 November or at the latest on Sunday, 19 November when Mr Lewis informed him that the machine was on its way. He did not read Du Pont's standard terms and conditions as he considered that they were not relevant.
 On Friday, 24 November 2006 Mr Lewis and Mr Payne of Du Pont visited Baillie's premises to carry out a site survey. By then, Baillie had ordered material for the construction of the print room within their workshop and workers were beginning to assemble the walls of the room. Mr Baillie in his evidence rejected the suggestion that the room had been designed to house a smaller machine. He explained that the Anapurna machine was larger than the machine which Du Pont were to install. The print room was being constructed in the open workshop to house the Du Pont machine. The Du Pont employees inspected the means of access into the workshop. They discussed with Baillie the power supply and compressed air supply which the machine would need and also the extraction system to remove noxious fumes.
 After he completed the site survey, Mr Payne sent his survey report to the delivery company, which Du Pont engaged to install the printing machine. Thereafter, Du Pont and Baillie corresponded by email concerning the specification of a compressor for the printing machine and also, to assist the delivery company to plan the installation, the height of the steps into Baillie's workshop.
 On 29 November 2006 Du Pont instructed Dun & Bradstreet to carry out a credit check on Baillie. Du Pont postponed the delivery of the printing machine from the proposed delivery date of 4 December 2006 in order to demonstrate it to another potential customer. They installed the printing machine in Baillie's premises on 13 December 2006. On the same day, Mr Minto completed on behalf of Baillie a credit account application which stated that the estimated monthly spend would be £20,000. The application form referred to Du Pont's standard conditions of sale which were printed on the reverse of the form.
Evidence of the parties' subjective understanding
 The parties led evidence of the subjective understanding of the persons who were directly involved in putting the contract in place. They were Mr Minto of Baillie and Mr Lewis of Du Pont.
 Mr Minto was aware of Baillie's standard terms of contract and that suppliers often sought to have their terms incorporated into a contract. He accepted on cross-examination that the 17 November proposal did not cover matters such as the payment of interest, the passing of risk, a mechanism for the intimation of claims, retention of title when there was deferred payment and force majeure. But he was surprised to receive Mr Lewis's email on 20 November as he thought that he had already done a deal on 17 November and that Mr Lewis had confirmed the contract on the previous day. He had construed the email of 19 November, which stated "it's on the way", as referring to the printing machine and not the processing of a possible contract. He said that the email of 20 November was a case of Mr Lewis having forgotten to include the standard terms in the contract and his "doing his paperwork" after the event. Mr Minto did not respond to that email as he thought that Du Pont's standard terms were irrelevant as they came too late. To his mind Baillie had done a special deal with Du Pont to purchase the printing machine at cost price as Du Pont were very keen to break into the Scottish market with their product.
 Mr Minto was aware that there required to be a site survey, but Mr Lewis had already seen the premises in June 2006, had formed the view that they could accommodate the machine and had informed him that that was the case. The planned survey was required only to ensure that the doors of the building were wide enough to allow the machine to be installed. Had he applied his mind, he would also have been aware of the possibility of a credit check as, although Baillie were paying for the machine in cash, there were deferred payments of the price. He had thought from what someone from Du Pont had said to him on 16 November that Du Pont already knew that Baillie had the financial means to pay the purchase price of the machine. He had understood that the application to open a credit account on 13 December 2006 related to the purchase of ink and other consumables, and not to the printing machine. That was why the form referred to the estimated expenditure of £20,000 per month.
 Mr Lewis knew Du Pont's internal procedures. It was their normal practice to carry out credit checks and for the customer to apply to open a credit account with Du Pont if they were to supply goods other than for cash in advance. The site survey was also needed in every case as one could find many things on site which would prevent an installation going ahead as planned. In this case, the phasing of payment by Baillie necessitated the opening of a credit account. Under Du Pont's procedures, they would not install the machine until the European business manager had approved the credit check on the customer and the engineer had inspected and approved the site. Mr Lewis's understanding of the deal was that there would not be a binding agreement between the parties for three months after the delivery of the machine as he understood that Baillie had a right to return the machine within that period if they were not satisfied with it.
 Mr Lewis explained that when he responded to the instruction to go ahead by saying "It's on the way", he meant to convey the idea that Du Pont were undertaking the measures to enable the installation of the machine, namely the credit check and the site visit. He interpreted Baillie's instruction to go ahead as an agreement that Du Pont should proceed to the site survey and the credit check. He sent Baillie Du Pont's standard terms and conditions on 20 November as he knew that he had to send them at some stage and thought that it was better to do so earlier rather than later. The site survey was a significant event in any deal as, if there were insuperable health and safety problems, Du Pont would not install their machinery in a customer's premises. When asked why Baillie had completed a credit application form, Mr Lewis thought it was to cover their purchase of consumables such as ink but was not sure. He confirmed that Du Pont would have to open an account to invoice Baillie for the printing machine as well as the consumables. Until Du Pont approved a customer's order in accordance with its internal procedures, the order could not be accepted.
 On cross-examination Mr Lewis confirmed that he was aware that Baillie had had dealings with B & P Lightbrigade and that he was keen to close a deal on the printing machine to exclude a competitor. But he understood that Baillie were to be given a three month period to evaluate the product and that Du Pont would remain vulnerable to competition until the end of that period. He accepted that Du Pont had not sent any other document, which set out the equipment to be supplied and its cost, after the proposal which accompanied the email of 17 November. Nor was there any written purchase order after that date. He also explained that if a customer cancelled an order it was Du Pont's policy to accept the cancellation as they made money not from the sale of the printing machine but from the consumables used in it.
The parties' contentions
 Mr Weir, advocate, on behalf of Baillie, submitted that the parties had entered a binding contract when Mr Lewis, in his email of 19 November 2006, confirmed that the printing machine was "on the way". The contract, he submitted, comprised the documentary exchanges on 17 and 19 November 2006 and no oral communings qualified the terms of those exchanges, which the court should construe objectively. The evidence about the matters discussed in the telephone conversation on 17 November was not of a quality that that conversation could be treated as qualifying in any way the written communications. Whatever may have been in the minds of Du Pont's employees was of no materiality if it was not communicated to the pursuers. The fact that the target installation date was to be confirmed after the survey could be explained by considerations of practicality; Baillie's workshop had to be equipped for the installation. He referred to S.S. Ardennes (Cargo Owners) v S.S. Ardennes (Owners)  1 KB 55, McCutcheon v David MacBrayne Ltd 1964 SC (HL) 28, Thornton v Shoe Lane Parking Ltd  2 QB 163 and Olley v Marlborough Court Ltd  1 KB 532.
 Mr Cormack, solicitor advocate, on behalf of Du Pont, submitted that, properly construed, the proposal letter of 17 November 2006 was an invitation to treat and that the email exchanges which followed on 17 and 19 November were of an informal nature which did not manifest an intention to enter a binding contract. The written communications between the parties were to be assessed against the following factual background. Businessmen would expect a supplier to seek to incorporate its standard terms of sale. Baillie as well as Du Pont had standard terms of contract which they used in their commercial dealings. The communings, which on Baillie's submission constituted the contract, did not deal with the passing of risk, retention of title, interest on late payments, the intimation of claims or force majeure, which were covered by both parties' standard terms.
 Further, Baillie knew that Du Pont had to carry out a site survey and a credit check, each of which had the potential to prevent a contractual relationship coming into existence. Mr Cormack accepted that the written documents had not made the satisfactory completion of these steps a suspensive condition which would prevent the existence of a binding contract; but he submitted that the parties' awareness of those steps was part of the relevant factual matrix. The emails of 17 and 19 November were very informal and should be viewed in the light of the telephone conversation between Mr Minto and Mr Lewis on 17 November. Mr Minto's failure to respond to Mr Lewis's email of 20 November, in which he intimated Du Pont's standard terms, also was relevant. There would have been communings between the parties after 29 November 2006 to arrange for the delivery of the printing machine. The precise time when the contract came into existence was not clear but it was after Du Pont had sent Baillie their standard terms and Mr Minto had not responded to receiving them. Thus the proposal of 17 November and Du Pont's standard terms were both contractual documents. Mr Cormack did not insist on his pleaded esto case that Mr Minto's signature of the credit application on 13 December 2006 amounted to a variation of a previously agreed contract. He referred to McBryde, "The Law of Contract in Scotland" (3rd ed.) paras 7.02 to 7.07, Aisling Developments Ltd v Persimmon Homes Ltd  CSOH 140 and Chisholm v Wardrope 2005 SCLR (Notes) 530.
 The principal issue in this case is whether the parties had entered into a binding contract on 19 November 2006, before Mr Lewis sent Mr Minto Du Pont's standard terms. While the evidence which the parties adduced included the subjective views of the persons who concluded the contract, namely Mr Minto and Mr Lewis, one party's views are not relevant to the task which the court has to perform, except to the extent that they were communicated to the other party or cast any light on the factual circumstances which were known to both parties.
 I formed the view that all four witnesses were doing their best to recollect events accurately. Neither party challenged the credibility or reliability of witnesses in his submissions and I see no basis for such a challenge.
 Parties were not in any significant dispute as to the law which is to be applied when the court considers whether a binding contract has been formed. It may be summarised briefly. First, the court has to address not only whether the parties have agreed all of the legally essential elements of a bargain, or the means of achieving that agreement, in their negotiations but also whether they have manifested an intention to be immediately bound. Secondly, the court adopts an objective approach, having regard to what the parties said and did in the course of the negotiations: Fletcher Challenge Energy Ltd v ECNZ Ltd  2 NZLR 433 at para , to which Lord Glennie referred in Aisling Developments Ltd. It asks what would reasonable and honest men in the position of the parties and having their shared knowledge of the surrounding circumstances have understood by the communications which passed between them. In McCutcheon v David MacBrayne Ltd Lord Reid at p.35 quoted Gloag on Contract (2nd ed. at p.7) in which it is stated: "The judicial task is not to discover the actual intentions of each party; it is to decide what each was reasonably entitled to conclude from the attitude of the other". In the context of a commercial transaction the court asks what would have been the reasonable expectations of sensible businessmen: G Percy Trentham Ltd v Archital Luxfer Ltd  1 Lloyds Rep 25, Steyn LJ at p.27. Thirdly, it follows that the court may look at evidence of the negotiations and also any statements of subjective intention, which, by being communicated to the other party, form part of the factual matrix.
 Fourthly, while it is important to consider the events as they unfolded in order to take an objective view of what reasonable people would have understood the position to be at the time the bargain was allegedly concluded, the parties' actings after that time are also relevant to the extent that they may cast light on what reasonable persons would have understood at that earlier time: Aisling Developments Ltd at para  and Fletcher Challenge Energy Ltd at para . Finally, the court adopts an entirely neutral approach when determining whether parties intended to enter into a contract at a particular time: Fletcher Challenge Energy Ltd at para . This contrasts with the attitude of the court once it has decided that the parties did intend to contract; then it will seek to give effect to that intention and uphold the contract if it can. As Lord Wright said in G Scammell and Nephew Ltd v Ouston  AC 251, at p.268, "the court will do its best, if satisfied that there was an ascertainable and determinate intention to contract, to give effect to that intention..." (my emphasis). But in considering the prior question of intention to contract the court stands back.
 In this case the parties had been in contact with each other since June 2006. Mr Baillie and Mr Minto had visited Du Pont's premises in Stevenage on 16 November 2006. There will have been discussions but there was no evidence that the content of those discussions qualified the written communications between the parties. There was evidence of a telephone conversation between Mr Lewis and Mr Minto on 17 November after Mr Lewis had sent his proposal, but the quality of the witnesses' recollection of what was discussed was such that no reliance can be placed on what might have been said on that conversation. It appears from Mr Lewis's evidence that he thought, erroneously, that the contract proposal included a probationary period of three months and that Du Pont could not be confident that Baillie would buy its inks in the longer term, until that period had expired. As he had this, understandably, commercial focus, it is unlikely that he said anything which would have alerted Mr Minto to any reservation which he had as to the formation of a binding agreement. As a result, the task for the court is principally to consider the written communications and the actings of Mr Minto and Mr Lewis against the factual background of which each was aware.
 It is important to observe that the proposal of 17 November 2006 was intended to be a final proposal. See Mr Lewis's email of 2 November 2006: paragraph  above. Mr Cormack also accepted that that proposal was intended to be a contractual document; his case was that it and Du Pont's standard terms set out the terms of the contract. There were no other documents which set out the contractual terms and there was no written purchase order or other document which vouched the formation of the contract. It was also common ground between the parties that the 17 November proposal contained the essential elements of a contract of sale. Prima facie it was an offer which was open for acceptance. Against that background, the email exchanges of 17 and 19 November 2006, while informal, were the only vouching of the contract, other than, on Du Pont's approach, the email of 20 November by which Mr Lewis intimated their standard terms. In the circumstances I am not persuaded that the informal nature of the email communications of 17 and 19 November 2006 points towards an intention to postpone the formation of a contract. On the contrary, the instruction to go ahead and the response that it's on the way would suggest to reasonable persons that the parties were agreeing a binding deal.
 Mr Cormack was not able to point to any time when the bargain became binding between 19 November and 13 December 2006, when the printing machine was delivered, or thereafter. While it is possible that a contract may come into existence during the performance of a transaction, that does not appear to be what happened in this case.
 The 17 November proposal did not state that there were any suspensive conditions which required to be satisfied before the agreement to sell became binding. There was no evidence that Baillie knew that they could cancel their order at any time after 19 November. While Mr Minto was aware that suppliers, including Baillie itself, generally sought to incorporate their standard terms of contract into a contract of sale, I do not consider that that knowledge would cause the reasonable businessman, who was aware of the circumstances leading up to 19 November 2006, to consider that Du Pont were not offering in their proposal to enter into a binding agreement. Baillie were buying a printing machine which had been used as a demonstrator and Du Pont were eager to penetrate the Scottish market with their new product. Du Pont wished to exclude a rival bid by B & P Lightbrigade by reaching agreement with Baillie. As the cases which Mr Weir cited demonstrate, it is not uncommon for a party to fail to incorporate its standard terms when it concludes an agreement. I accept Mr Minto's evidence that he did not respond to Mr Lewis's sending of Du Pont's standard terms on 20 November because he thought he already had a deal and that the terms were therefore irrelevant. I consider that the reasonable businessman would have taken a similar view.
 Similarly, while Mr Minto was aware that Du Pont were to carry out a site survey before they installed the printing machine, there was no evidence that either party was concerned that Baillie's premises could not be adapted to accommodate the machine. Nor was there any suggestion that Du Pont had intimated that the outcome of the site survey might be a deal breaker. Du Pont had internal procedures for processing a potential order for the supply of valuable machinery. They had to carry out a credit check if the customer did not pay cash in advance and the salesman had to obtain the approval of the deal by the European business manager. But there was no suggestion that Mr Minto or any other employee of Baillie was aware of Du Pont's internal procedures. The evidence established that Mr Minto was aware that Du Pont would be likely to carry out a credit check on Baillie before they delivered the printing machine, but he did not know whether the check had been carried out before or after 17 November. There was no suggestion in the evidence that anyone from Du Pont ever told Baillie that they would not be bound into a contract until they had obtained a favourable credit check. I see no basis for holding that that the reasonable businessman would have taken the view on 17 or 19 November 2006 that the possibility that Du Pont had not yet carried out such a check meant that, in making the proposal of 17 November and in replying to the instruction to go ahead, Du Pont did not intend to reach a binding agreement.
 For completeness, I record that Du Pont did not advance the argument set out in their defences that their emails contained a standard disclaimer that the email did not constitute a contractual offer or acceptance unless it was designated that an e-contract was intended. Such an argument would have been inconsistent with Mr Cormack's approach and would have been met by the response that it was the attached proposal rather than the email which was the offer document.
 I am satisfied that the parties entered into a binding contract for the supply of the printing machine by 19 November 2006, before Du Pont intimated their standard terms and conditions. Accordingly, those standard terms were not incorporated into the contract of sale. I therefore sustain the pursuers' fourth plea in law, grant declarator in terms of the second conclusion and repel the defenders' plea of no jurisdiction. I will have the case put out by order to determine further procedure.