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EU/CISG: Formal requirements on the conclusion of agreements on international venues of court in general terms and conditions

03-31-2010 11:17 AM CET | Politics, Law & Society

Press release from: bunk-alliance Rechtsanwälte

EU/CISG: Formal requirements on the conclusion of agreements

In day-to-day business relationship, the parties involved in many cases only determine the essential contractual requirements, such as price, quantity delivered, etc. The question which law shall be applicable, the competent court in case of legal disputes and other provisions, that should be agreed upon contractually, are left out, since the parties very often do not have time in order to negotiate such questions extensively. For this reason many companies use general terms and conditions, i.e. contractual terms pre-formulated for more than two contracts, which one party to the contract presents to the other party by entering into the contract. Very often the user only refers to his general terms and conditions during the ordering procedure or the order acceptance, without providing the counterparty with the text of the general terms and conditions.
In Germany the Higher Regional Court in Celle decided that at least with regard to agreements on the venue of courts it is not sufficient to refer in the acceptance of an order to the general terms & conditions and the accessibility of those via the user`s web page in his office. The judgment was rendered due to the following facts:

An Austrian company (defendant) ordered hardware from a company located in Germany (plaintiff), via fax. This order was confirmed by the plaintiff via fax of the same date, in which the plaintiff referred to the applicability of its general terms and conditions, which were accessible on the web site of the plaintiff as well as in its offices. The general terms and conditions provided for the following:

10.1 The legal relationship between the parties is governed exclusively by the law of the Federal Republic of Germany.
10.3 The court of venue for all current and future claims in connection with this business relationship is Germany.

The plaintiff commenced legal proceedings in Germany in front of the district court Verden for payment of the remaining purchase price. The international competence of the German courts derived from the general terms and conditions, of which the plaintiff alleged that those had been handed over to the defendant. The defendant however opposed that the text was handed over. In the course of the legal dispute, the remaining purchase price was paid and the parties declared the legal dispute as finally cleared. The district court Verden split the costs, since it regarded the summons founded but the outcome regarding the question of the international competence of the district court Verden without a hearing of evidence as undetermined outcome. This decision was appealed by the plaintiff and finally decided by the Higher Regional Court in Celle.

The Higher Regional Court Celle decided that the district court Verden indeed was not able to accept its international competence on the grounds of the undisputed pleadings of both parties. Article 23 regulation (EC) no. 44/2001 of 22nd December 2000 on jurisdiction and the recognition and enforcement of judgments in civil and commercial matters provides for a possibility of an agreement on the court of venue. However article 23 of the aforementioned regulation must be interpreted narrowly due to the possible consequences of such an agreement for both parties. The requirements for an agreement on the court of venue in terms of article 23 are
a) it must have been the intention of both parties to enter into an agreement on the court of venue and
b) this intention must have been expressed clearly and directly. With regard to such formal requirements, a reference to the general terms and conditions, providing for a clause on the court of venue, is only sufficient, if the confirmation of the counterparty is manifest. Therefore general reference to the applicability of general terms and conditions in an order acceptance and the accessibility of those general terms and conditions on the user`s web page or in his offices, is not sufficient in order to manifest the defendant`s confirmation to the court of venue, as provided for in general terms and conditions. For this it would have been necessary that the general terms and conditions had been provided to the defendant by entering into the contract. However it is disputed by the parties that this was done.

Also if one would scrutinize the applicability of such court of venue clause in accordance with German law, one would not end up with another appraisal. Also in that case a reference on the accessibility of general terms and conditions is not sufficient. The reference to German law in close 10.1 of the general terms and conditions leads to the applicability of the United Nations Convention on contracts for the international sale of goods (CISG), which forms a part of German law (also applicable in Poland, Slovakia, Czech, USA, China, Austria, the Netherlands, etc.). Therefore the applicability of general terms and conditions in a contract underlying the CISG, must be determined in accordance with the applicable provisions of the contract. In terms of article 8 CISG, it is necessary that the recipient of a contractual offer to which general terms and conditions shall apply, must have the opportunity to note the content of those general terms and conditions beforehand.

bunk-alliance Rechtsanwälte, offers legal advice to middle-sized companies, both foreign and domestic, on all areas of commercial law, as well as solutions to complex issues.
Our law firm’s attorneys possess extensive knowledge in their jurisdiction and have broad range of experience in international cases. Be it company law, M & A, bankruptcy law, complex restructuring or debt recovery, together we formulate the best solution for you and your company.
An important part of our activities lies in assisting companies facing financial difficulties. We work together with creditors and investors to overcome these issues and ensure that possible risks for the management, partners and lenders are minimized. We also have extensive experience in buying out companies or parts of companies from a crisis situation.
Another important part of our activities is advising foreign companies on entry into the German market, or those who are already here. We provide expert, targeted advice to our foreign clients on all areas of law related to commercial activities in Germany.

bunk-alliance Rechtsanwälte
Goethestr.15, 67547 Worms
Tel: 06241972490
Fax: 062419724911
Email: secretary@bunk-alliance.de
Web: www.bunk-alliance.com

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