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Translation of "Kollidierende Geschäftsbedingungen im internationalen Vertragsrecht", in: Karl-Heinz Thume ed., Festschrift für Rolf Herber zum 70. Geburtstag, Newied: Luchterhand (1999) 36-49, with an updated reference to a January 9, 2002 ruling by the Supreme Court of Germany added thereto.[*]

Battle of the Forms in International Contract Law

Evaluation of approaches in German law, UNIDROIT Principles,
European Principles, CISG; UCC approaches under consideration

Peter Schlechtriem

Translation by Martin Eimer

I. Standing of the Discussion in Germany
II. Possible Solutions in CISG Contracts

1. The kind of collision
2. Conduct of the parties
III. Solution Attempts in the UNIDROIT Principles and in the Principles for European Contract Law
1. UNIDROIT Principles
2. European Principles
IV. Reform Attempts in the USA: The discussion on a revision of Art. 2-207 UCC
V. Conclusions

[…]

I. Standing of the Discussion in Germany

The development of jurisprudence and doctrine on the problem of colliding terms of business in Germany has often been reported and must only be repeated here in a short outline.[1] A first epoch can be characterized by the fact that the solution was being looked for in § 150(2) of the German Civil Code [BGB]: acceptance with reference to one's own terms and conditions was a counter-offer pursuant to § 150(2) BGB which, in turn, sought a corresponding acceptance. Of course, the conclusion of a contract hardly ever failed on the grounds of § 150(2) BGB:[2] either the performance of the contract by the original offeror (acceptance of the other party's performance or performance of one's own obligation) was regarded as acceptance of the counter-offer in the sense of § 151 BGB; or one side prevailed through a reference in its "confirmation of order/contract" because it was regarded as a commercial letter of confirmation which had contract forming effect in the absence of any complaint being made by the other side in due course. Thus the party that had last referred to its terms and conditions finally succeeded and the solution was accordingly named "theory of the last word" or the "last shot doctrine.[3] On the other hand the BGH [German Supreme Court] had already ruled in the so-called Schwelfelbrocken case [4] of 1957 that the steady referral to one's own terms and conditions despite actual performance of the contract did not lead to any side prevailing with its terms; nevertheless, a contract had been concluded the content of which was to be governed by statutory rules. This solution, already proposed earlier by Raiser and Rabel,[5] became the rule to the BGH's decisions since 1973; the reasoning also referred to §§ 154, 155 BGB, i.e., the lack of consensus regarding the validity of colliding terms was seen as a dissent being treated as insignificant by the parties.[6] The classic summary of this solution can be taken from a decision of the OLG Koblenz:

"Where parties exchange letters and each time refer to their contradicting terms and conditions, none of their standard forms becomes part of the contract. Nevertheless, a contract is validly concluded if it becomes clear that the parties did not want to have the contract fail just because of the lack of consensus on the general terms and conditions."[7]

This solution then also became predominant within the commentaries, although it did not go without objections.[8] In the discussions on a new Act for the Regulation of the Law of General Terms of Business [AGBG] taking place at the same time, the question was left open in order not to prejudice the possibility that one party to the contract could have submitted to the other party's general terms;[9] and indeed, in 1977 the BGH again in principle based a decision on § 150(2) BGB.[10] […]

Today's commentaries largely take the position that in cases where a contract is actually performed, the collision of terms is a dissent in part which does not hinder the validity of the contract but has the colliding terms replaced by statutory law.[11]

II. Possible Solutions in CISG Contracts

As already reported, the UN Sales Law has not dealt with this problem. Proposals in this respect[12] remained unsuccessful; the slight simplification of contract conclusion despite the divergence of offer and acceptance as permitted by Art. 19(2) CISG is practically reversed for general terms by Art. 19(3) CISG as such collisions are generally concerned with the examples given in Art. 19(3) CISG.[13] It is no surprise that in the discussion of the problem in context of the CISG, the proposals made and views taken for German law also emerged and were strongly represented there. The theory of the last word [14] and - in case this last word was clearly rejected - even the view of failure of contract conclusion [15] were presented as well as the view of a valid contract combined with the replacement of colliding terms by statutory law,[16] the reasoning for which differed. Most importantly, however, questions of the conclusion of a contract were treated as inseparable from those of the contract's content.

This is not the place - neither is it the purpose of this article - to present a thorough discussion of the various proposals and theories. The aim is rather to report on innovative possible solutions as can be found in the "Principles of International Commercial Contracts" (UNIDROIT Principles) [17] as well as the "European Principles of Contract Law"[18] of the Lando Commission. Above all, reform attempts of the National Conference of Commissioners on Uniform State Laws in connection with the upcoming revision of Art. 2 UCC (Sales) also intending to renew Art. 2-207 UCC and to solve the problem of colliding terms of business more clearly shall be taken into account. This article is accompanied by the hope to find an exit of the circle in which the discussion mostly moves. In order to judge the innovative attempts and keep in mind the authorities and court decisions on the CISG at the same time, it is recommended to first determine a series of possible case scenarios in which each proposed solution has to prove itself. One must distinguish between the kind of collision, on one hand, and the conduct of the parties because of or despite the collision, on the other.

1. The kind of collision

a) In many cases it is a collision of an incorporation and a defense clause: The offeror wants to order something and refers to the fact that only his ordering terms and conditions shall become the basis of the contract (sometimes including the condition that a deviation or waiver of his terms and conditions may only be valid if accepted expressly and in writing). The other side refers to the fact that her acceptance shall only be valid on the basis that her delivery terms and conditions become the basis of the contract (again, maybe, with the provision that deviations are subject to express acceptance or acceptance in writing). The will of concluding the contract and the validity of the respective terms are linked and put under one condition.

b) From this collision of incorporation and defense clauses, one must distinguish divergencies of single clauses, such as, e.g., different arbitration clauses, choice of forum, warranty or payment periods also included in the respective delivery or ordering terms.

c) Quite often no obvious contradiction exists between individual clauses where one side regulates certain aspects in its terms which are not considered by the other side. In these cases, one can only speak of a collision if one assumes that the silent party proposes the statutory rules to become effective to the extent her terms do not cover this aspect. The contradiction then usually exists between the statutory rule and the rules proposed by one side as well as those of the other being modified accordingly.

2. Conduct of the Parties

As regards the parties' conduct various reactions are possible in the different situations described above:

a) The party that was last confronted with the other side's terms clearly objects [19] and refuses to perform the contract refering to its invalidity.

b) The party that was last confronted with the other side's terms of business first remains silent but then - before commencement of her own performance or acceptance of the other party's performance (maybe because the market situation has changed) - tries to get out of the contract by referring to the contradiction between the respective terms.

c) One or both parties have commenced their performance and performed or accepted performance. Now, one party relies on the invalid conclusion of the contract.

d) Both parties have fully performed the contract; one party relies on the invalidity (maybe in connection with claims brought by the other side). Or one party puts forward claims for breach of contract in a forum the choice of which is expressed in his uncontradicted terms of business. The other party denies the validity of the choice of forum.

It is obvious that neither the different situations of collision nor the various possible behaviors of the parties can be unified in a single formula. This is also shown by the following potential solutions in the UNIDROIT Principles, European Principles and discussions on the reform of Art. 2-207 UCC.

III. Solution Attempts in the UNIDROIT Principles and in the Principles for European Contract Law

1. UNIDROIT Principles

In Art. 2.19, the UNIDROIT Principles contain a reference to the general rules on the conclusion of contract including Art. 2.1 which not only provides for a conclusion by offer and acceptance but also "by conduct … sufficient to show agreement." The reference to the general contractual rules, however, is subject to the validity of certain special rules; here Art. 2.22 (battle of forms) is interesting:

"Where both parties use standard terms and reach agreement except on those terms, a contract is concluded on the basis of the agreed terms and of any standard terms which are common in substance unless one party clearly indicates in advance, or later and without undue delay informs the other party, that it does not intend to be bound by such a contract."

2. European Principles

The European Principles [20] advance in a quite similar fashion: After a general reference to the general rules on contract conclusion pointing to the parties' will to be bound, which then "is to be determined from the party's declarations as they were reasonably understood by the other party," a special norm is proposed for colliding standard terms:

"Article 2:209 (ex art. 5.210) Conflicting General Conditions

(1) If the parties have reached agreement except that the offer and acceptance refer to conflicting general conditions of contract, a contract is nonetheless formed. The general conditions form part of the contract to the extent that they are common in substance.

(2) However, no contract is formed

(a) if one party has indicated in advance, explicitly, and not by way of general conditions, that he does not intend to be bound by a contract on the basis of paragraph (1); or

(b) if later on, one party, without undue delay, informs the other party that he does not intend to be bound by such a contract."

Both regulations therefore accept the general possibility that a valid contract can be formed despite conflicting terms and conditions; they distinguish between the conclusion itself and the content. As regards the content, the terms and conditions only become relevant to the extent to which they are common in substance, whereas the conflicting terms remain irrelevant ("knock-out" doctrine) [21] and must probably be replaced by regulations contained in the Principles or the applicable national law. The theory of the last word ("last shot" doctrine) [22] is explicitly rejected. But both works also contain the possibility that the validity of the contract may fail on the objection of one (each) side. Here, the second case ("unless one party … later and without undue delay informs the other party that it does not intend to be bound …") does not pose any problems in the substance; its solution should not raise doubts because the presumption that the party to the contract does not really rely on its own terms and conditions is refuted by that party's objection and the other party could not rely on a valid conclusion.

The Achilles' heel of the proposed solution is the taking into account of the possibility that "one party clearly indicates in advance … that it does not intend to be bound by such a contract." By conditionally linking the contract's validity to the substantial enforcement right, the incorporation and defense clauses - their wording and clearness - receive decisive relevance; it is obvious here that the authors of the UNIDROIT Principles surrendered to the art of the "cautelar-jurists": every advocat drafting standard terms of business and contract forms for his client just needs to take care that the agreement to conclude the contract "clearly indicates" that the agreeing party only wants to be bound if its terms and conditions become effective. The authors of the UNIDROIT Principles have tried to prevent this and outlined in their comments that a "clear indication" is not just given by a respective standard clause in terms of business or its interpretation.[23] The European Principles express the invalidity of such standardized defense clauses even more clearly: "if one party has indicated in advance, explicitly, and not by way of general conditions …" (emphasis added). In practice, it will nonetheless be easy to attach to the respective declaration to conclude the contract a special declaration as sought by the UNIDROIT Principles [24] - this is already common in many contract forms - instead of placing it at the top of standard terms and conditions. Practice could also react by a notice - prepared and attached to the own declaration of concluding the contract - which, expressly and clearly separated from the standard terms, emphasizes the incorporation of one's own terms and rejection of any other standard terms. Assessing this exception, one must therefore take into account the ingenuity of practitioners as well as - and first of all - the case constellations described above under II.2.c) and d): In cases of full performance of the contract which turned out to be disadvantageous for one party, should such a clear, unambiguous and maybe even individual defense clause suffice "to get out of" the contract?

IV. Reform Attempts in the USA: The discussion on a revision of Art. 2-207 UCC

Art. 2-207 of the still valid version of the UCC [25] was a first attempt to solve the problem by statute.[26] The first two sections of this article on the one hand stipulate the predominance of clear incorporation or defense clauses (in section (1) and section 2(a)); the acceptor only has a chance of implementing his diverging terms if they do not change the contractual contents fundamentally (section 2(b)). On the other hand, the end of section (3) simplifies the possibility of concluding a contract by the conduct of the parties despite colliding terms; here, too, the question of the conclusion of the contract is separated from the question of its contents. Practice, however, has not understood to gain from the possibility of seeing that far, so that certain pressure for reform developed.[27] The discussion of those who were to report on the reform and the Commission produced a series of different proposals which cannot be taken into account in detail here. Their pinpoints however show the difficulty of formulating a proper (general) rule.[28] As regards the contents of the contract, a draft of January 1996 in substance again focused on the distinction between substantial and unsubstantial supplementations, the first of which should only exceptionally form part of the contract.[29] In a special rule, the draft already provided that "a contract may be made in any manner sufficient to manifest agreement, including by offer and acceptance and conduct of both parties recognizing the existence of the contract," section 2-203. A draft of November 1996 [30] - created as a basis for discussion - first tightened the conditions under which the standard terms of one side would be regarded as being accepted by the other despite substantial changes (only with signature). But it adheres to the principle of distinguishing between contract conclusion and the contract's contents, so that in principle colliding terms did not affect the contract's validity and contracts "may be made in any manner sufficient to show agreement, including by offer and acceptance or conduct of both parties recognizing the existence of a contract," section 2-203(a). In (d), the express acceptance of the other side's conditions was regarded possible by "affirmative conduct with knowledge or reason to know;" this left unresolved the conflict concerning the contract's contents, e.g., in cases where both sides showed their acceptance by performing the contract, i.e., affirmative conduct.[31] A draft of January 1997 again focused on the simplified implementation of unsubstantially diverging terms on one side and substantial differences on the other (sections (4) and 5(b)), whereas special rules for standard terms were waived altogether;[32] it is worth noticing again that by reference to Art. 2-203,[33] the separation of the question of validity, i.e., the conclusion of the contract, from the question of contents was maintained, so even in cases of lack of agreement on single points "an agreement sufficient to make a contract" could be assumed (s.sub (b) and (c)). In a draft of March 1997,[34] the substantiality of divergence still played a role (section (2)), but - the question of validity presupposed - the battle of forms was only seen as part of the overall question of implementation of "terms and records," which seemed to intend a control of the implementation of surprising and unfair clauses (section (3)); the terms "standard forms" or "standard terms" did not turn up any more. The reference to Art. 2-203 which permitted the conclusion of a contract by conduct, also fell away. But this possibility seems to be provided for in the wording "if a contract is formed under this article …"[35] The subject "collision of standard terms" came up more clearly in a draft of May 1997.[36] Here, the possibility of concluding a contract by "conduct" despite diverging terms was again expressly taken into account (sub (c)).

As regards a draft of March 1998,[37] the version of which is the last the author of this article can draw on, the commentary once again refers to the "long and interesting drafting history" and clarifies that a contract could be concluded despite colliding terms (sub (a)), so that the only question was how to determine the content of the contract in cases of colliding terms. Apart from cases of corresponding terms or those where the parties have agreed on certain conditions in a different way, being already partly provided for in past pre-drafts, the subjugation of one side under the other side's conditions again depended on an "express agreement". Interestingly, the commentary referes to the CISG and rejects the "last shot principle" provided for in Art. 19. Comparing it to the CISG, it states that the draft neutralized the first as well as the last shot, and ambiguous conduct did not mean acceptance of the rejected terms of the other side; only express acceptance meant subjugation. The same would be true if a contract was only concluded by conduct instead of offer and acceptance (c); for this "knock out" rule, reference was also made to Art. 2.22 of the UNIDROIT Principles. The Achilles heel being the validity of conditions formulated in implementation and defense clauses of course remains vulnerable also in this newest version:[38] Although section 2-203 acknowledges the possibility of concluding a contract by conduct instead of offer and acceptance (sections (a)-(c)) - also reported in former drafts and Art. 2-207 - Art. 2-203 section (d) still allows for conditional dependence of a declaration for the conclusion of a contract from the acceptance of one's own terms by the other side. The doubts indicated above concerning Art. 2.22 UNIDROIT Principles, that the problem is handed over to the cautelar jurists of the parties, are therefore valid here, too.

V. Conclusions

1. The drafts on the UCC reported here in my opinion - apart from the last version - show a development insofar as they clearly separate the question of a valid conclusion of the contract from the arrangement of its contents in cases of colliding terms of business - whether standardized or not.[39] Particularly the range of possible differences - "substantial" or "unsubstantial" - is irrelevant; the view of Art. 19 CISG, based on the historic and too narrow idea that a contract can only be concluded by corresponding declarations [40] - i.e., offer and acceptance - and the linking of the "act" (of concluding a contract) and the "regulation" (of the contract's contents) [41] are overcome. At least where the parties have clearly expressed their intention to be bound by their conduct and have thus formed a valid contract, the only question remaining is: Whether and under which circumstances one side prevails with its terms, or whether the terms of both sides become irrelevant to the extent they do not correspond and the contents of the contract are therefore determined by statutory law.

2. In contrast to this the UNIDROIT Principles, the European Principles as well as the reported last version of the draft on the UCC remain stuck half way if they again allow the conditional linking of contract conclusion and the implementation of the parties' respective terms.[42] In my view, any solution which in the end makes the validity of the contract depend on the wording of respective clauses and conditions, must fail because in this competition the cautelar practice as the hedgehog will always reach the finishing line before the rabbit, i.e., the legislator. To reach a proper solution, one must protect oneself also against cautelar practices. In my opinion, this is only possible if one distinguishes between the situations described above in sub II. 2. as well as the questions of conclusion and contents. The question of conclusion must be crucial, i.e., whether the parties have shown that they want to be bound. This may at least be the case where the parties perform or start to perform their duties under the contract, irrespective of the kind of divergence between their terms. An implementation or defense clause, according to which - "in advance" - the declarator's intention to be bound depends on the implementation of his own and the invalidity of the other side's terms, makes his declaration (to conclude the contract) at the time of declaration a conditional one, but the condition is later dropped (waived) by conduct which implies such intention. Therefore, in cases where a longer period of time lies between the conclusion and the time for performance, claiming the invalidity only shortly before performance is due can also remain unsuccessful if the conduct at the time of conclusion permits the interpretation that the parties wanted to be bound. Examples would be preparations for the performance by one side, who then claims invalidity of the contract at a later stage, negotiations on further contracts without mentioning the diverging points, acceptance of part performances, etc.[43]

3. Where one side rejects the other side's reference to its own terms straight after receipt, there is no intention to be bound by the contract, even where the divergence between the respective terms of business is not great (leading idea of Art. 19(2) CISG) or the collision is only one-sided, i.e., the rejecting side objects against intentions of the other side to partly displace the statutory rules by its terms. In this case, the rejector's conduct clearly does not show the intention to be contractually bound, and the dependence of his contract declaration - offer or acceptance - on the agreement to his terms or/and the rejection of the other side's terms also excludes the correspondence of wills by those declarations.

In other cases, it can be assumed that the contract is more important to the parties than the diverging clauses, i.e., in any case their own regulations. On this point the reasoning of the OLG Koblenz (Appeal Court) is convincing:[44]

"… it seems more necessary than before to take into consideration the reality of business dealings. In this respect, experience shows that the contractual partners normally do not want to have the conclusion of the contract fail due to a missing agreement on colliding standard terms (examples). Thus the collision problem is often intentionally left open. Only if difficulties arise during the performance, do the parties return to the point in order to strengthen their own legal position. Therefore, simple and qualified defense clauses in standard terms also serve the purpose to possibly deliver arguments in those cases."

Also:

"Delivery and acceptance of the goods rather indicate that the contractual partners do not want to have the contract fail because of the deficient agreement on the inclusion of standard terms (§§ 154, 155 BGB as well as § 6 AGBG, which insofar expresses a general legal idea)."

Finally, the subject-matter of any objection must also be taken into account and extracted if necessary: If it is only pointed against the other side's attempt to create the contract's contents, then the contract has been concluded, and only the contents remain to be determined. If, however, the objection is pointed against the conclusion itself - maybe according to the conditional linking of a respective implementation or defense clause and as expressed by the wording "does not intend to be bound" - then the conclusion of the contract initially failed. Whether the one or other objection was intended and expressed must be determined by interpretation of the objecting declaration; Art. 8 CISG is helpful in this respect.

4. What could the dogmatic backing of this solution look like? As regards the conclusion of a contract under the BGB in my opinion - as said earlier already [45] -- §§ 154, 155 BGB contain a potential basis for a solution as they draw on the question which importance a partial dissent should have for the parties and their intention to be bound expressed in their contractual declarations. According to § 154(2) BGB even an express implementation or defense clause only hinders the conclusion of the contract "if there is doubt," a doubt which in cases of long silence or performance can be put aside. Insofar, in my opinion, the decision of the American Reform Commission to give up the distinction between standard clauses and other contract conditions proves to be right. And if the divergence of terms and implementation clauses had been overseen, then the question must be posed which importance the respective terms and their implementation had for the parties ("… insofar as can be assumed," § 155 BGB).

Both regulations are based on a principle that permits one to come to the same solution under the CISG, too: It is the principle of party autonomy, which enables the parties to form the procedure of contract conclusion and to deviate from Art. 19 CISG - or § 150(2) BGB - in order to create a binding (relationship) despite the lack of agreement on all points and - even - the existence of objections, which, according to the wording of the respective declarations, would initially lead to their invalidity. The principle of party autonomy thus also permits the "coming together" (agreement) by conduct independent of the declarations of offer and acceptance as well as the waiver of preset conditions for the validity. The intention to be bound as expressed by this conduct not only derogates a conditional version of one's own implementation or defense clauses but also the statutory rules for divergences between offer and acceptance. Art. 6 CISG, which prescribes the predominance of party autonomy, is also valid and effective for the regulation of the procedure of contract conclusion and leaves it to the disposition of the parties. Therefore, in a CISG contract in which offer and acceptance differed, the Amtsgericht Kehl [Lower Court] was right to point to Art. 6 CISG and the intention to be bound as indicated by the parties' performance of the contract.[46] The analysis of other cases decided under the CISG also shows that the courts in the end point to the parties' agreement becoming clear from the circumstances. In a practically frequent case of clauses, i.e. an incongruent jurisdictional clause, the French Cour de Cassation rejected a prorogation under Art. 17 EuGVÜ [European Convention on Jurisdiction and the Enforcement of Judgments in Civil and Commercial Matters], because an agreement was missing in this respect. The court viewed the rest of the contract, the performance of which had already been commenced, to be validly concluded without even mentioning Art. 19(3) CISG.[47] A slightly different reasoning in a similar case had been given by the Cour d'appel of Paris before.[48] In the eyes of the judges, the jurisdictional clause of the offeror, whose standard form had been countersigned by the other side, was irrelevant because it was printed on the back of the offer and the offeror had not pointed it out. In the much debated Filanto decision,[49] both parties had referred to the buyer's distribution contract with a Russian customer which, apart from detailed delivery guidelines, also entailed an arbitration clause. The contractual declarations in the long, complicated and inconsistent negotiation phase partly referred to single regulations, partly to the whole agreement (framework) including the arbitration clause. Finally, for the assumption of a binding contract, the fact that both parties had started to carry out the contract by delivery of goods and opening a letter of credit was decisive.

5. Therefore, the question of the contractual contents and their development by the clauses used on each side remains. No problem emerges where the clauses are congruent, i.e., both sides call for the same forum or the jurisdiction of the ICC Court of Arbitration, etc. On the other side, it seems to me that even cases of clearly diverging clauses can be solved easily in most circumstances: They fall out and are replaced by statutory rules or trade custom and commercial practice formed between the parties ("knock out" rule) - a solution that some favor as a general one. This does not exclude the existence of special circumstances which can lead to a withdrawal of one side and the submission under the clauses of the other side; the express (subsequent) consent as envisaged in the reform proposals to Art. 2-207 UCC is at least theoretically unproblematic whereas in practice it can produce difficulties, especially difficulties of proof - as is shown by the different attempts to interpret what an "express" declaration is. Whether "express" can also mean a corresponding conduct or demands an unambiguous verbal formulation, in my opinion, is again a problem of interpretation. As far as the CISG is concerned, it is the interpretation of the parties' conduct which is supposed to indicate their intention and is governed by Art. 8 CISG. Especially the circumstances of Art. 8(3) making clearer an objective interpretation under Art. 8(2) CISG can be of importance here. Where -- in cases of diverging clauses on the place of performance -- one side partly performed at the place prescribed in the other side's clause, this is a "later conduct" in the sense of this provision permitting the interpretation that one submits to the other side's clause. If, in this example, earlier transactions had always been performed at the place provided for in one side's terms, then the other side's conduct must be interpreted in the light of "habits developed between them;" without any indication to the contrary the conduct must be regarded as the submission to the respective clauses of the other side. In contrast to this, the attempt to have the formation of the contract's content depend on the dimension of the divergence - i.e., to allow simplified inclusion in case of unsubstantial divergences but to adopt the "knock-out rule" in cases of substantial divergences (only) - is hardly convincing: The distinction between "substantial" and "unsubstantial" is not very practical as is shown by the decisions and commentaries on Art. 19(2) CISG [50] as well as the disagreement on the question whether Art. 19(3) CISG is binding or only contains a rule of evidence;[51] the dimension of the divergence, can at best constitute a "circumstance" in the sense of Art. 8 (3) CISG in interpreting the meaning of a party's conduct: the greater and more disadvantageous the divergence the less silence or performance of the contract can be understood as submission to the other side's differing terms.

6. In my view, the frequent constellation that only the terms of one side provide a regulation of a specific question, e.g., limited warranty, limitation of the time to pay, a reservation of title, etc., whereas the other side is either silent on that point or only uses a general defense clause - often ignored as a special case - is also a question of interpretation. The starting point here could be that insofar as their proposed conditions do not contain a regulation, either side tacitly assumes the statutory rules to be effective, so that differing proposals of the other side nevertheless lead to a divergence between the parties' proposals on the contract's contents. This seems to be often the case where all conditions of the other side are rejected by a general defense clause unless explicitly agreed to or congruent with one's own terms (which seems to be the solution of the new German Supreme Court [BGH] ruling, supra note [16a]); peculiarities exist in Germany where the seller's terms of business (delivery) contain a reservation of title.[52] Exceptions are imaginable, of course, e.g., where clauses actually benefit the other "defending" side (contrary, however, BGH, see at note [16a]). After all, it seems reasonable to me to believe that each party, insofar as it does not attempt to insert proposals on the contents into the contract - pre-formulated or individual - assumes that the statutory rules (or relevant trade usages) are applicable. Whether and to what extent it gives way to the other side's clauses is as much a matter of interpretation as in cases of open collision. Where standard clauses insert contractual provisions to which the terms of the other side remain silent, the courts sometimes, also in applying the CISG, see in the performance of the contract the implicit acceptance of those conditions,[53] especially if they are beneficial to the silent party.[54] As in cases of open collisions, the acceptance of all or certain clauses of the other side can also be assumed from the parties' habits or subsequent conduct. The knowledge or - practically more important - the possibility of knowing certain - usual - clauses of the other side can also become important for the interpretation of a party's conduct.[55] Where such interpretation of one party's conduct is not possible - or the necessary circumstances for their support cannot be proven - one should stick to the basic rule that colliding terms of business remain unrecognized for the contents of the contract and will be replaced by statutory rules.[56]

[…]


FOOTNOTES

* The manuscript of the contribution to the "Festschrift für Rolf Herber" was finished early in 1999, and the information and analyses in the translation presented here were not updated. In particular, the proposals for a reform of Art. 2 UCC reflect the material only as of spring 1999; the developments and the new amendments since then had to be neglected. Only one exception to this "no updating rule" was made by inserting as a footnote the new landmark decision of the German Supreme Court of January 9, 2002 on the battle of the forms under CISG (new fn. [16a]).

1. Extensively Ulmer in Ulmer/Brandner/Hensen, AGB-Gesetz, Commentary, 8th edition, Cologne 1997, § 2 nos. 92 et seq. For the special case of a reservation of title in battles of the forms of sale and purchase terms, referring to general solutions, Graf Lambsdorff, "Der Eigentumsvorbehalt bei Kollision von Verkaufs- und Einkaufsbedingungen" [Reservations of Title in Battles of the Forms of Sale and Purchase Terms], ZIP 1987, 1370 et seq. The author may also refer to his own analysis "Kollidierende Standardbedingungen und Eigentumsvorbehalt" [Battles of the Forms involving Standard Terms and Reservation of Title] in: Zum Deutschen und Internationalen Schuldrecht [On the German and International Law of Obligations]. Colloquium on the occasion of the 75th birthday of Ernst v. Caemmerer, Tübingen 1983, page 1 et seq.; earlier "Die Kollision von Standardbedigungen beim Vertragsschluss" [Battle of the Forms involving Standard Terms at Contract Formation], Festschrift Wahl, Heidelberg 1973, pages 67-80.

2. For the time until 1974 see Mohrbutter, Überblick zur höchstrichterlichen Rechtsprechung bei einem Widerspruch zwischen den Einkaufsbedingungen des Käufers und den Verkaufsbedingungen seines Lieferanten [Overview on Supreme Court Decisions in case of Discrepancy between the Purchase Terms of the Buyer and the Seller's Terms of Sale], KTS 1975, 93-103.

3. Compare the references in my article (above footnote 1) in footnotes 2, 4.

4. WM 1957, 1064 et seq.

5. Raiser, "Das Recht der allgemeinen Geschäftsbedingungen" [The Law on General Terms of Business], 1961, page 225; Rabel, "Recht des Warenkaufs" [The Law on Sale of Goods], volume 1, 1936, page 101.

6. BGH WM 1974, 842; see also BGHZ 61, 282 and BGH WM 1973, 1198.

7. OLG Koblenz WM 1984, 1347 et seq.; for the special cases of a collision of seller's reservation of title and the buyer's defense clause, see below at footnote 46. Often - as also in the decision BGH NJW 1985, 1838, 1839 cited at footnote 46 - one assumed a valid formation of the contract and only regarded the question of the contract's content to be problematic.

8. See the references in my article above (footnote 1) in footnotes 9, on the one hand, and footnote 10, on the other hand.

9. See Bundestagsdrucksache 7/3919, page 17 et seq.

10. See first JZ 1977, 602; as to the later decisions on the collision of a reservation of title clause and a defense clause, see the text below.

11. Compare Palandt-Heinrichs [Commentary on the BGB], 57th edition, Munich 1998, § 150 no. 4; Münchener Kommentar/Kramer, 3rd edition, Munich 1993, § 154 no. 7; Staudinger/Dilcher, 12th edition, Berlin 1979, § 150 no. 13; Staudinger/Bork, 13th edition, Berlin 1996, § 150 no. 17 et seq.; Ulmer (see footnote 1), no. 98; Wolf/Horn/Lindacher, 3rd edition, Munich 1994, § 2 no.72 et seq.; van Alstine, "Fehlender Konsens beim Vertragsschluss nach dem einheitlichen UN-Kaufrecht" [The Lack of Consensus upon Contract Conclusion under the Uniform UN Sales Law], Baden-Baden 1995, page 34 seq., with further references.

12. As had been proposed by Belgium: Where the contracting parties, in the course of negotiations, have explicitly or conclusively referred to their general terms of business, the clauses of which are mutually exclusive, the colliding clauses should not be regarded part of the contract, (A/Conf. 97/C1/L87) Official Records, page 96; for the discussion of this proposal see Official Records, page 288 seq. (A/Conf. 97/C1/SR10, page 12 et seq.), also published in Honnold, "Documentary History of the Uniform Law for International Sales", Deventer 1989, page 509 seq..

13. The predecessor to Art. 19(2) CISG, Art. 7(2) of the1964 Hague Uniform Law on the Formation of Contracts for the International Sale of Goods [ULF] had, of course, been created with the purpose to find a solution for the "battle of the forms", which was seen as a classic example for the divergence of offer and acceptance (Farnsworth, "Formation of International Sales Contracts: Three Attempts at Unification, U. Pa. L. Rev. 110 (1962) 305 et seq., 322). As an example, the American delegate to the Hague Conference on ULF, Mrs. Mentschikoff, pointed out Art. 2-207(2)(b) UCC (for details, see v. Caemmerer, "Die Haager Konferenz über die internationale Vereinheitlichung des Kaufrechts vom 2.-25. April 1964" [The Hague Conference on International Unification of the Law of Sales of 2-25 April 1964]. For the results of the Conference on the Unification of the Law of Formation of International Sales Contracts, see RabelsZ 29 (1965), 101 et seq., 127, which reports that the decisive proposal was made by the Swedish delegation).

14. - with reservations, of course, against the legal-political wisdom of this solution and a "caveat", that it could depend on the individual circumstances - see Bianca/Bonell/Farnsworth, Commentary on the International Sales Law, Milan 1987, Art. 19 no. 2.5; Honnold, Uniform Law for International Sales Under the 1980 United Nations Convention, 2nd edition, Deventer 1991, nos. 169 and 170; Lookofsky, The 1980 United Nations Convention on Contracts for the International Sale of Goods, in: Blanpain (editor), International Encyclopaedia of Laws - Contracts, Deventer 1993, pages 1-156, nos. 124 et seq.; Vergne, The "Battle of Forms" Under the 1980 United Nations Convention on Contracts for the International Sale of Goods, 33 Am.J.Comp.L. (1985), 233, 256; Winship, Formation of International Sales Contracts Under the 1980 Vienna Convention, 17 Int'l Law. (1983), 1, 12; Jametti Greiner, "Der Vertragsschluss" [Contract Conclusion], in: Hoyer/Posch (editors), "Das einheitliche Wiener Kaufrecht" [The Uniform Vienna Sales Law], Vienna 1992, page 43, 52; Karollus, "UN-Kaufrecht" [UN Sales Law], Vienna 1991, page 71; Rudolph, "Kaufrecht der Export- und Importverträge - Kommentierung des Übereinkommens über internationale Warenkaufverträge mit Hinweisen für die Vertragspraxis" [Sales Law for Export and Import Contracts - commentary on the Convention on International Contracts for the Sale of Goods with proposals for contracting practice], Freiburg 1996, Art. 19 no. 4; Diéz-Picazo, La Compraventa internacional de mercaderías, Comentario de la convention de viena, Madrid 1998, Art. 19 note VIII; Perales Viscasillas, La formación del contratoen la compraventa internacional de mercaderías, Valencia 1996, pages 693 seq., 734; also probably Herber/Czerwenka, "Internationales Kaufrecht" [International Sales Law], Munich 1991, Art. 19 no. 18.

15. Especially committed Neumayer/Ming, Convention de Vienne sur les contrats de vente internationale de marchandises, Lausanne 1993, Art. 19 no. 4 ; Neumayer, "Das Wiener Kaufrechtsübereinkommen und die sogenannte "Battle of Forms"" [The Vienna Sales Convention and the so-called "Battle of Forms"], FS Giger, Bern, 1989, page 501, 524; and also, insofar as the parties have not yet started performance, Audit, La vente internationale de marchandises, Paris 1990, pages 69 et seq. and Dessemontet, La convention des Nations Unies du 11 avril 1980 sur les contrats de vente internationale de marchandises, in: Dessemontet (editor), Contrats de vente internationale, Lausanne 1991, page 47, 57; to the New Yorker E 1978 already Huber, "Der UNCITRAL-Entwurf eines Übereinkommens über internationale Warenkaufverträge" [The UNCITRAL-draft of a Convention on International Contracts for the Sale of Goods], RabelsZ 43 (1979), 413, 434 et seq.

16. Staudinger/Magnus, "Wiener UN-Kaufrecht" [Viennese UN-Sales Law], Berlin 1994, Art. 19 nos. 20 et seq.; Honsell/Schnyder/Straub, „Kommentar zum UN-Kaufrecht" [Commentary on the UN-Sales Law], Berlin 1997, Art. 19 no. 38; Bertrams/van der Velden, Overeenkomsten in het internationaal privaatrecht en het Weense Koopverdrag, Zwolle 1994, page 145; Bianca/Bellelli, Convenzione di Vienna sui contratti di vendita internazionale die beni mobili, Milan 1992, Art. 19 no. 2, page 92 et seq.; Heuzé, La vente internationale de merchandises - Droit uniforme, Paris 1992, page 142; Ludwig, "Der Vertragsschluss nach UN-Kaufrecht im Spannungsverhältnis von Common Law und Civil Law" [Contract Formation under UN-Sales Law in the tension between Common Law and Civil Law], Frankfurt a.M. 1994, pages 336 et seq.; Murray, An Essay on the Formation of Contracts and Related Matters Under the United Nations Convention on Contracts for the International Sale of Goods, 8 J.L. & Com. (1988), 11, 44; Niggemann, "Die Bedeutung des Inkrafttretens des UN-Kaufrechts für den deutsch-französischen Wirtschaftsverkehr" [The importance of the UN Sales Law's coming into effect for French-German trade], RIW 1991, 372, 377; Piltz, "Internationales Kaufrecht" [International Sales Law], Munich 1993, page 99, nos. 96 et seq.; Stoffel, Formation du contrat, in: Schweizerisches Institut für Rechtsvergleichung (editor), Lausanner Kolloquium 1984, Zürich (1985), pages 55-76; van Alstine (footnote 11), pages 220 et seq.

16a. The German Supreme Court in a recent decision of January 9, 2002 [English translation available online at <http://cisgw3.law.pace.edu/cases/020109g1.html>] has confirmed that despite conflicting standard clauses, the contract is valid, and that the conflicting terms are void and replaced by the provisions of the convention regulating the respective subject matter. A German firm had sold powdered milk to an enterprise in the Netherlands which, in turn, exported the goods to customers in Algeria and Aruba (Antilles). The customers claimed that some parts of the powdered milk were defective, and the buyer sought compensation from the German seller. While the seller conceded the defects and offered to take back the powdered milk, it declined to pay damages as requested by the buyer. The seller argued that the CISG was derogated by a clause in its standard forms and that, under the applicable German Civil Code, no damages could be claimed. In addition, a clause in the standard forms of the Plaintiff (buyer) (!) limited recoverable damages to the purchase price and was applicable here despite the conflict of forms because it was favorable for the seller. The Supreme Court confirmed that neither the buyer's nor the seller's standard forms were included in the contractual agreement. The Court refused to single out some clauses of one side which might be beneficial for the other side (the Court refused to uphold them despite the general collision of the standard terms); since Plaintiff [buyer]'s standard form was in its entirety fair and balanced, but deviated from the CISG regime and was contradicted by the Defendant [seller]'s terms, one could not pick out only some clauses in favor of the Defendant [seller]. The Court added that the same result could be reached under the last shot doctrine, for the silence of the Plaintiff [buyer] to the last reference of the Defendant [seller] to its own terms could not, under good faith and fair dealing principles - the Court erroneously invoked Art. 7(1) CISG here - be interpreted by the Defendant [seller] as a willingness of the Plaintiff [buyer] to let only those clauses in the Plaintiff [buyer]'s form be accepted which were favorable for the Defendant [seller].

Despite some opaque arguments and sentences, the core message of the Supreme Court of Germany is clear: Conflicting standard forms are entirely invalid and are replaced by CISG provisions, while the contract as such stays valid.

17. UNIDROIT, Principles of International Commercial Contracts, Rome 1995.

18. Lando/Beale (editors), The Principles of European Contract Law, prepared by the Commission of European Contract Law, Dordrecht 1995. Art. 2:209 - the provision relevant here - is only included in the revised version of 1996, which will be published at the end of 1998. The draft is accessible on the internet in the International Trade Law Monitor <http://itl.irv.uit.no/trade_law/doc/EU.Contract.Principles.1997.preview.html> or at the homepage of Storme at <http://www.ufsia.ac.be/estorme/PECL2en.html>.

19. Especially: provable.

20. The provision presented here was not contained in the draft published in 1995 but was kindly given to the author of this article, see above footnote 18.

21. See the author's comment on Art. 2.22 UNIDROIT Principles sub 3.

22. See comment no. 2 and no. 3 on Art. 2.22 UNIDROIT Principles.

23. "The inclusion of a clause of this kind in the standard terms themselves will not normally be sufficient ...".

24. "... a specific declaration by the party concerned in its offer or acceptance is necessary" (UNIDROIT-Principles, comment 3, page 63).

25. One must remember that the Uniform Commercial Code as such does not have uniform effect in all U.S. states but has to be "transferred" by the legislator of each state; the version reported in this article has been accepted in all states except Louisiana.

26.-38. In footnotes 26 through 38, the author reported consecutive UCC drafts which, being abandoned entirely, need not be reprinted here.

39. This corresponds to the modern view in Germany, see Ulmer (footnote 1), no. 98 (contract conclusion) and nos. 101 et seq. (contract’s content).

40. On the historical conditions of these elements of contract conclusion see Bucher, “Preisvereinbarung als Voraussetzung der Vertragsgültigkeit beim Kauf – Zum angeblichen Widerspruch zwischen Art. 14 und Art. 55 des Wiener Kaufrechts“ [Agreement on the price as a condition for the validity of the sales contract – on the alleged contradiction between Art. 14 and Art. 55 of the Vienna Sales Law], in: FS Piotet, Bern 1990, page 371, 378 et seq.: “Denkfiguren der letzten Minute”, d.h. des 19. Jahrhunderts [conceived ideas of the last minute, i.e., the 19th century].

41. On this Flume, Allgemeiner Teil [general part], Band 2, 2nd edition, Berlin 1975, § 6 I, pages 78 et seq.

42. But equally also on the internal German Law Ulmer (footnote 1), no. 99: reservation of validity leads to § 150 (2) BGB.

43. Exactly in cases in which the objection is made some longer time after contract conclusion, it will often be impossible to prove that other motives than the late discovery of the discrepancy – e.g., a change in the market situation which renders the contract unfavorable – are the trigger; nevertheless the late objector should have to give reasons for his venire contra factum proprium why he objects so late.

44. Above footnote 7 on page 1349.

45. See above footnote 1 as well as OLG Koblenz (footnote 7), WM 1984, 842.

46. AG Kehl NJW-RR 1996, 565 et seq.

47. Cass. Civ. 1er, 2 December 1997, J.C.P. 1998, Èd. E, 151. The competence of the French courts was based on Art. 5 Nr. 1 EuGVÜ.

48. Cours d’appel de Paris, 13 December 1995, JCP 1997, Èd.G, II, nx 22772, note Vareilles-Sommières. Similar also Cours d’appel de Paris, 13 December 1995, (unpublished, CISG France : http://www.jura.uni-sb.de/FB/LS/Witz/cisg.htm) : Contradicting jurisdiction clauses in standard terms of the invoice after delivery of the goods. The contract had already been concluded, the clause on the back of the form had not been accepted, but could not be accepted anymore.

49. Filanto S.p.A. v. Chilewich International Corp., 789 F.Supp. 1229 (S.D.N.Y. 1992). 984 F.2d 58, appeal dismissed (2nd Cir. 1993); see on this Nakata, Sounds of Silence Bellow Forth Under the CISG’s International Battle of Forms, 7 Transnational Law. (1994), 141-163 and Brand/Flechtner, Arbitration and Contract Formation in International Trade: First Interpretations of the U.N. Sales Convention, 12 J.L. & Com. (1993), 239-260 = 6 Int’l Q. (1994), 1-25.

50. See only LG Baden-Baden, RIW 1992, 62: the notice requirement “before transfer of the goods, in any case within 30 days of the invoice date” as unsubstantial modification; agreeing Witz, Les premières applications jurisprudentielles du droit uniforme de la vente internationale (Convention des Nations Unies du 11 avril 1980), Paris 1995, page 59, disagreeing Karollus, Judicial interpretation and application of the CISG in Germany 1988-1994, 1 Rev. CISG (1995), 51-94, 61.

51. Compare Bianca/Bonell/Farnswoth (footnote 14), Art. 19 no. 2.7 and 3.1 seq.; Honsell/Schnyder/Straub (footnote 16), Art. 19 no. 14; Neumayer/Ming, (footnote 15), Art. 19, no. 3; Staudinger/Magnus (footnote 16), Art. 19 no. 15 all with further references; also the decision of the Austrian OGH, ÖJZ 1997, 829 on divergences regarding the amount.

52. The reservation of title clause opposite a defense clause has prevailed in the German case law without the decisions adding to the clarification of the question: Because of the abstraction principle, the transfer of title was to be elaborated independent of the contract (law of obligations) and was invalid in lack of an unconditional will to transfer, so that the seller could – in the insolvency of the buyer – at least assert rights of ownership or claim such assertion, compare BGH NJW 1982, 1749, BGH NJW 1982, 1751 as well as OLG Düsseldorf ZIP 1988, 1415 seq. The BGH, however, has also acknowledged the influence of the buyer’s defense clauses on the content of the contract, see BGH NJW 1985, 1838, 1839 (but contract conclusion was not put in question!) and BGH ZIP 1986, 1052, 1054: it referred to the conditional transfer on which the purely contractual defense clause could not have any influence: had the buyer known of the reservation of title contained in the terms of sale nor could buyer have been reasonably expected to know, then the old rule that the passing over of the goods contains an offer of unconditional transfer was not effective. Accordingly, at least for the in rem security the defense clause remained without effect. Although the BGH still took the view that the validity of the transfer’s dependence on a condition – seeking separate evaluation because of the abstract transfer – did not mean that overall the seller had prevailed with his conditions over the defense clause; in the following the BGH goes on to say that the pre-assignment of sale-on profits as contained in the seller’s standard terms was invalid because it failed on the buyer’s defense clause.

53. OLG Saarbrücken, 13 January 1993, 1 U 69/92, (unpublished, CISG online 83, http://www.jura.uni-freiburg.de/ipr1/cisg): unilateral requirement of notice “within 8 days after delivery”. OLG Munich, 11 March 1998, EWiR Art. 39 CISG 1/98, page 549 (comment by Schlechtriem): unilateral choice of law clause in favor of German law.

54. So the OLG Munich case above.

55. See German court decisions on the validity of a reservation of title despite the buyer’s own defense clause (above footnote 50).

56. See the BGH decision reported above footnote 52 NJW 1985, 1838, 1839 and ZIP 1986, 1052, 1054, where at least the seller’s pre-assignment clause failed; nonetheless, the buyers had used a general defense clause.


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