Retour à la page contenant cette publicationNews February 2022: Contractual drafting - How to make your terms and conditions effective and enforceable towards your partner (being domestic or international)
Reminder:
It is always worth repeating.
When there is no signed contract and in the event of a dispute, having one's general terms and conditions of sale (GCS) attached to is invoices may not be regarded as sufficient to legally bind its domestic or international partner, which may also have issued, during the order process, its own general terms and conditions of purchase (GCP).
In such a context, which conditions, between the GCS and the GCP, shall prevail?
What to remember:
From an international standpoint, the conflict between general terms and conditions is appraised differently depending on the applicable law. As a matter of fact, the approaches are different from a country to another.
Thus, English, Italian or Dutch law generally adopts a formalistic approach: only the conditions implicitly or expressly accepted by the other party form the contract, to the exclusion of all other conditions ("last shot rule / first shot rule").
American and German law elect a more pragmatic approach, under which a contract may be based on the essential elements of the agreement between the parties, despite contradictory provisions. The contract is solely entered into on the basis of the mutually-agreed general provisions, to the exclusion of divergent clauses, which are set aside ("knock-out rule").
French law’s approach gets close to the "knock-out rule" as Article 1119 paragraph 2 of the French Civil Code provides that "in the event of a discrepancy between the general conditions raised by both parties, the divergent provisions are without effect".
However, once the contradictory clauses have been set aside, how can we know which general conditions should ultimately prevail?
It should be borne in mind that, according to the same article 1119 (paragraph 1er) of the French Civil Code, "the general conditions raised by a party shall have no effect on the other party unless they have been brought to the latter’s knowledge and accepted by him".
What lessons in practice?
For the purposes of having its own general conditions (either of sale or purchase) to prevail over its partner’s, it shall be mainly recommended to:
- choose (especially within an international context) French law as the governing law (in order to make sure that article 1119 of the French Civil Code and related case law shall, at the end of the day, be referred to for the avoidance of any doubt);
- disclose the general conditions from the very first commercial exchanges (and not only on the back of invoices, generally only issued lately) and include them in a clear and legible manner on its commercial documents (cf. as a reminder, even between professionals, the lack of legibility of the general terms and conditions can lead to their unenforceability). The proof of the sending/disclosure of such general conditions should be taken care of.
- obtain from its partner a formal consent to its general conditions. Getting its partner to sign its GCS or GCP is rather illusory under commercial exchanges (especially of an international scale) but there are other ways to get such acceptance, notably through the signature of another document (ie. an order form for example) referring clearly and expressly to said general conditions. Particular attention should be paid as to the wording of such reference; it should also be ensured that the general conditions, even if they evolve, still continue to bind the partner.
Without a formal contract, the general conditions (provided that they meet the enforceability criteria) shall be regarded as a contract and will be regarded as legally binding, therefore conferring to the issuing party a stronger negotiating position. The drafting of the general conditions and their articulation in/with the commercial documents exchanged is therefore critical.
Sarah Temple-Boyer Lara Saaifan
Lawyer Legal Intern