The battle of forms is where a business enterprise has contracted with another business and both parties claim that their General Terms and Conditions are applicable to the contract that has been entered into. The question is which General Terms and Conditions apply in this instance?
When do General Terms and Conditions apply?
Article 6:217 of the DCC states that agreements are into by offer and acceptance, which also applies to General Terms and Conditions. In order for the General Terms and Conditions to be valid and applicable to the contract, the contract needs to clearly state that the General Terms and Conditions apply. Acceptance of the applicability of the General Terms can also be implied in the event that the other contracting party does not know the content.
Legal obligation to present the General Terms and Conditions to the other party
Article 6:233 and 6:234 of the DCC does provide for a duty on the party relying on the General Terms and Conditions to inform the other party by presenting the General Terms and Conditions to the other party. If these requirements are met the General Terms and Conditions are applicable to the contract, so the applicability requirement for General Terms and Conditions is less stringent that in relation to the contract itself.
Which General Terms and Conditions apply to the agreement?
In the event that both parties declared their General Terms and Conditions to be applicable, Article 6:225(3) DCC provides for a solution to determine which set of General Terms and Conditions apply. This article is what is referred to as the “first shot” principle. The “first shot” principle is where one party applies the General Terms and Conditions to be applicable and the other party in turn does the same. In this case the first party declaring their General Terms and Conditions to be applicable goes first provided that the applicability if the other General Terms and Conditions are expressly rejected. Often this wording is included in the General Terms and Conditions themselves, which may not be sufficient.
When are General Terms and Conditions considered to be rejected?
Case law has shown that by merely adding wording to your company’s General Terms and Conditions is not sufficient for the “first shot” principle to apply under Dutch law. This means specific wording needs to be included in the contract or offer. It needs to be very clear to the other side that your company will and is rejecting their General Terms and Conditions.
Battle of forms: UN Convention on International Sale of Goods
In the event that the parties to the agreement are selling commercial goods internationally ,then the United Nations Convention on Contracts for the International Sale of Goods (CISG) United Nations Convention on Contracts for the International Sale of Goods (Vienna, 1980) (CISG). United Nations Commission On International Trade Law is applicable to the contract when both parties have their place of business in a nation that have signed CISG: List of Contracting States | Institute of International Commercial Law (pace.edu) the CISG. It is important to note that the CISG is a lex specialis, meaning that this Convention is applicable to the contract in priority of the Netherlands Dutch Civil Code. For example, when one party has their place of business in the Netherlands, and the other party in Germany, then the CISG is applicable to the agreement in priority to the national jurisdiction. The CISG applies to the international sale of goods only to services and does not apply to consumer goods.
The CISG can also be specified by the contracting parties as the choice of law. This means that the contract for the international sale of goods is governed by the CISG even if one of the parties is from a nation that has not signed the CISG. Similarly, parties can also opt out of the CISG in the contract.
Which General Terms and Conditions apply to the international agreement?
Article 19 of the CISG states that the General Terms and Conditions are applicable in accordance with the “last shot” rule. This means the last party declaring their General Terms and Conditions to be applicable is successful, which is different to the relevant provision in the Dutch Civil Code (DCC). The CISG is generally very pro seller, which is something worth taking into consideration when you are the seller of the goods. Especially bearing in mind that you can opt into the CISG even if one of the parties is from a non-signatory nation.
If the CISG is expressly excluded by parties in the contract, and parties have agreed for the contract to be governed by Dutch law, then the provisions of the Dutch Civil Code apply to the applicability of the General Terms and Conditions.
Are you looking for an attorney at law who specialises in the use and applicability of General Terms and Conditions for an international agreement? Please feel free to contact Madelon van Breemen.
