History & Modern Evolution of Transnational Commercial Law

Document-Id: 650004, Please cite as: "https://www.trans-lex.org/650004"

Title

Spagnolo, Lisa, in: Mankowski, Peter (ed.), Commercial Law - Article-by-Article Commentary, International and European Business Law by Schulze/Lehmann, 2019

Table of Contents

IV. Incorporation of standard terms 1. Reference to standard terms 2. Addressee awareness of standard terms

Content

IV. Incorporation of standard terms

Standard terms are an integral part of international trade in practice. They may take the form of an entity’s own standard business terms, or be sourced from a framework contract agreed by the parties. Alternatively, they may be sourced externally, for example, by reference to Incoterms^®,61UCP 600,62 or trade association model terms.63 These will derogate from the CISG wherever their provisions differ from it, if incorporated.
The question of incorporation (or inclusion) of standard terms within the contract is widely viewed as a matter for the formation provisions of the CISG.64 Domestic rulescontrolling standard terms are displaced by the CISG, unless they deal with issues of material validity (content control, e.g., fairness etc).65 The latter category includes domestic rules which control ‘surprising’ standard terms to the extent they deal with matters not governed by the CISG. This has led to a number of cases where clauses in contracts gov- erned by the CISG have nonetheless been held invalid due to domestic laws such as German BGB § 305c(1).66
Two requirements have been developed under the CISG for incorporation of standard terms. The first is a reference to the standard terms sufficiently demonstrative of
an intent to incorporate them. The second is the offeree’s awareness of the standard terms. Both are dealt with below.

1. Reference to standard terms

Unless the other party was aware of the subjective intent to incorporate the standard terms or could not have been unaware of it (Art. 8(1)), an objective test of what a rea-

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sonable person would understand to be their intent will need to be satisfied: Art. 8(2). To be effective, this means that the reference to the standard terms must be reasonably understood as demonstrating an intent to incorporate them into the contract to someone in the same circumstances as the offeree.67 Failure to include a reference in the offer or acceptance after mentioning the standard terms during pre-contractual negotiations long ago,68 an ambiguously worded reference to the standard terms,69 or a reference in a language unknown by the addressee,70 may not be sufficiently clear to demonstrate such intent to the addressee.71 Simply printing the standard terms on the reverse side of the offer without reference to them on the front has been held insufficiently clear to lead to their incorporation.72 Past practices between the parties, and relevant trade usages may affect a determination as to whether standard terms have been incorporated into the contract under the CISG.73
The CISG does not distinguish between ‘standard terms’ on the basis of whether they have been individually negotiated between the parties, or prepared in advance by one party (or a third party) for use in multiple transactions.74

2. Addressee awareness of standard terms

Where an addressee already knows of the content of standard terms referred to by the offeror, a reference will be effective to incorporate them into the contract: Art. 8(1) CISG.75 It is unnecessary to resend standard terms every time if past practices or usages demonstrate a party is or should be aware of them.76 A question arises as to what mini-

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mum threshold establishing that the offeree has such knowledge of the content of standard terms. There has been a division of thought on this issue. Some contend that, provided the offeree has ‘reasonable opportunity’ to become aware of the content, the standard terms will be incorporated.77 This approach leaves it to the offeree to seek further information, either by asking the offeror for a copy of the terms or by locating them, perhaps online.

The other view is that a ‘making available’ test should be applied, which effectively places the burden upon the offeror to take steps to make the offeree aware of the content of the standard terms. This approach is favoured by the vast majority of scholars and courts, and by the CISG Advisory Council.78 Notably, it may lead to a stricter standard for incorporation than applies in domestic law, for example, in Germany,79 however this is justifiable, since in international trade, there is a greater chance an addressee will be unaware of the content of standard terms than in a domestic transaction.80 The ‘making available’ test may be satisfied by (a) the offeror sending the text of the standard terms to the offeree (transmission), or (b) by making the text ‘otherwise available’.81

61ICC Incoterms^®. See, e.g., Incoterms® 2010, ICC Publication No. 715EF, 2010.
62UCP 600, ICC Publication No. 600LE (2007).
63For example, GAFTA 100: Grain and Feed Trade Association, No 100 ‘Contract for Shipment of Feed- ingstuffs in Bulk’ (1 October 1995). See Ulrich Magnus, ‘Incorporation of Standard Terms’ in Larry A. Di- Matteo/André Janssen/Ulrich Magnus/Reiner Schulze (eds), International Sales Law: Contract, Principles and Practice (Beck/Hart/Nomos, 2016) 243, 246 (arguing in relation to incorporation that little turns on the distinction between individually negotiated terms and standard terms).
64See, e.g., OGH 6 February 1996, CISG-online 224; Hoge Raad, Netherlands, 28 January 2005, CISG- online 1002; OGH 31 August 2005, CISG-online 1093; OLG Naumburg 13 February 2013, CISG-online 2455; Tribunale Rovereto, Italy, 21 November 2007, CISG-online 1590; Mankowski, Introduction Art. 14 para. 21; Ulrich Magnus, ‘Incorporation of Standard Contract Terms under the CISG’ in Camilla B. Andersen and Ulrich G. Schroeter (eds), Sharing International Law Across National Boundaries: Festschrift for Albert. H Kritzer on the Occasion of his Eightieth Birthday (Simmonds & Hill, Wildy 2008) 303, 304; Burghard Piltz, ‘Standard Terms in UN-Contracts of Sale’ (2004) 8 Vindobona Journal of International Commercial Law and Arbitration 233, 234; CISG Advisory Council Opinion No 13, Inclusion of Standard Terms under the CISG, Rapporteur: Prof. Sieg Eiselen, (‘CISG Advisory Council Opinion 13'), Rule 1. Contra Hof van Beroep Ghent, 4 October 2004, CISG-online 985 and various decisions in Netherlands and Germany which were rendered before respective Supreme Court decisions (above) followed the majority view. See also Schroeter, Art. 14 para. 40.
65Notably, the following requirements are pre-empted by the applicability of the CISG: German BGB § 305(2), (3); Codice Civile Italiano, Civil Code (Italy) Art. 1341(2); «[...]» Contract Law of the People’s Republic of China National People’s Congress, 15 March 1999 Art. 39(1). Indeed, “[recourse to domestic law or to non-binding rules, such as the PICC is neither necessary nor appropriate”: Ferrari, Art. 14 para. 38. However, issues of validity, unless dealt with by the CISG, are matters for domestic law: Art. 4(1) CISG, See also Bridge, para. 11.17; Magnus, ‘Incorporation of Standard Terms’ in Larry A. DiMatteo/André Janssen/Ulrich Magnus/Reiner Schulze (eds), International Sales Law: Contract, Principles and Practice (Beck/Hart/Nomos, 2016), 247; Stefan Kröll, ‘Selected Problems Concerning the CISG’s Scope of Application’ (2005-6) 25 Journal of Law & Commerce 39, 45; Zachariasiewicz, 101-104 (noting the debate as to whether CISG governs inclusion of forum selection clauses in standard terms).
66See BGH 24 March 1999, CISG-online 396 (exclusion of liability clause held invalid as suprising).
67BGH 31 October 2001, CISG-online 617; OLG Düsseldorf 30 January 2004, CISG-online 821 (clear to the reasonable person); Schroeter, Art. 14 para. 44; Ferrari, Art. 14 para. 39.
68OLG Jena 10 November 2010, CISG-online 2216 (10 months prior).
69OGH 6 February 1996, CISG-online 224 (‘usual conditions’ insufficiently precise); CSS Antenna, Inc. y. Amphenol-Tuchel Electronics, GmbH 764 F Supp 2d 745, 754, US District Court Md, United States, 8 February 2011, CISG-online 2177 (vaguely worded reference).
70See further, fn 111 below, and moreover, effect of languages foreign to the addressee on declara- tions ‘reaching’ the addressee --> Art. 24 CISG paras 50-54.
71Schroeter, Art. 14 para. 44.
72OLG Diisseldorf 30 January 2004, CISG-online 821; Audiencia Provincial de Navarra, Spain, 27 De- cember 2007, CISG-online 1798; CA Paris, France, 10 September 2003 (http://cisgw3.law.pace.edu/cases/0 30910f1.html). See also Ingeborg Schwenzer/Pascal Hachem/Christopher Kee, Global Sales and Contract Law (Oxford 2012), para. 12.07; Schroeter, Art. 14 para. 44; Magnus, ‘Incorporation of Standard Terms’ in Larry A. DiMatteo/André Janssen/ Ulrich Magnus/Reiner Schulze (eds), International Sales Law: Contract, Principles and Practice (Beck/Hart/Nomos, 2016), 247. Contra CISG Advisory Council Opinion 13, Com- ments para. 2.12 (where an offer contains no reference to standard terms, they may be incorporated if printed on the reverse or sent as a separate document, provided the “attached” terms are “conspicuous”.
73Arts 8(3), 9 CISG; OGH 6 February 1996, CISG-online 224; OGH 8 August 2005, CISG-online 1087; LG Neubrandenburg 3 August 2005, CISG-online 1190.
74CISG Advisory Council Opinion 13, Comments paras 1, 5-6; Schroeter, Art. 14 para. 39. Contra International Institute for the Unification of Private Law (UNIDROIT), UNIDROIT Principles of International Commercial Contracts (2016) Art. 2.1.19 (2) ((UNIDROIT Principles’); Commission on European Contract Law, Principles of European Contract Law, Parts. | and II (1998) and Part III (2002) (‘PECL), Art. 2:209(3); Christian von Bar and Eric Clive (eds), Principles, Definitions and Model Rules of European Private Law: Draft Common Frameof Reference (DCFR), Full Edition (Sellier, 2009) Art. II.—1:109.
75See also Schroeter, Art. 14 para. 47; Magnus, 322; Felix Lautenschlager, ‘Current Problems Regarding the Interpretation of Statements and Party Conduct under the CISG - The Reasonable Third Person, Lan- guage Problems and Standard Terms and Conditions’ (2007) 11(2) Vindobona Journal of International Commercial Law & Arbitration 259, 290; Zachariasiewicz, 116.
76For example, where there is a framework agreement setting out standard terms, or reference to widely known terms in international trade, e.g., Incoterms’: Magnus, 321-322; Felix Lautenschlager, ‘Current Problems Regarding the Interpretation of Statements and Party Conduct under the CISG - The Reasonable Third Person, Language Problems and Standard Terms and Conditions’ (2007) 11(2) Vindobona Journal of International Commercial Law & Arbitration, 280; Zachariasiewicz, 117; Schroeter, Art. 14 para. 47.
77Martin Schmidt-Kessel, 'Art. 8 CISG' in Schlechtriem & Schwenzer (ed), Commentary on the UN Convention on the International Sale of Goods (CISG), (4^th end, Oxford 2016) para. 58; Magnus, 'Incorporation of Standard Terms' in Larry A. DiMatteo/André Janssen/Ulrich Magnus/Reiner Schulze (eds), International Sales Law: Contract, Principles and Practice (Bell/Hart/Nomos, 2016), 248 n 10 (referring to views of Berger, Kindler and Schmidt-Kessel in this regard, although disagreeing); OGH 17 December 2003; CISG-online 828; Tribunal Commercial de Nivelles, Belgium, 19 September 1995, CISG-online 366; LG Coburg 12 December 2006, CISG-online 1447.
78See, e.g., BGH 31 October 2001, CISG-online 617; Roser Technologies, Inc. v. Carl Schreiber GmbH, US District Court WD Pa, United States, 10 September 2013, CISG-online 2490; OLG Düsseldorf 25 July 2003, CISG-online 919; OLG Düsseldorf 21 April 2004, CISG-online 915; OLG Celle 24 July 2009, CISG- online 1906; OLG Koblenz 4 October 2002, CISG-online 716: LG Neubrandenburg 3 August 2005, CISG- online 1190; Tribunale Rovereto, Italy, 21 November 2007, CISG-online 1590; Tribunale di Rovereto, Italy, 24 August 2006, CISG-online 1374; OGer Bern 19 May 2008, CISG-online 1814; Gerechtshof Den Haag, Netherlands, 22 April 2014, CISG-online 2515; Rb Amsterdam, Netherlands, 8 January 2014, CISG-online 2512; Mansonville Plastics (BCO) Ltd v. Kurtz GmbH, Supreme Court of British Columbia, Canada, 21 August 2003, CISG-online 1017; Magnus, ‘Incorporation of Standard ‘Terms in Larry A. DiMatteo/André Janssen/Ulrich Magnus/Reiner Schulze (eds), International Sales Law: Contract, Principles and Practice (Beck/Hart/Nomos, 2016), 248; Burghard Piltz, ‘Standard Terms in UN-Contracts of Sale (2004) 8 Vindobona Journal of International Commercial Law and Arbitration 233, 235; Ingeborg Schwenzer and Florian Mohs, ‘Old Habits Die Hard: Traditional Contract Formation in a Modern World’ (2006) 6 Internationales Handelsrecht 239, 240; Olaf Meyer, ‘Constructive Interpretation - Applying the CISG in the 21^st Century’ in Olaf Meyer and André Janssen (eds), CISG Methodology (Sellier, 2009) 319, 342; Ferrari, Art. 14 para. 39-40; CISG Advisory Council Opinion 13, Rules 2 and 3, Comments paras 2.3-2.4. Contra, holding that reference to standard terms is sufficient to put the addressee on enquiry: Martin Schmidt Kessel, ‘Art. 8 CISG’ in Schlechtriem & Schwenzer (ed), Commentary on the UN Convention on the International Sale of Goods (CISG), (4^th edn, Oxford 2016) para. 58; OGH 17 December 2003, CISG-online 828; Tribunal Commercial de Nivelles, Belgium, 19 September 1995, CISG-online 366; LG Coburg 12 December 2006, CISG-online 1447.
79Schroeter, Art. 14 para. 48.
80Ferrari, Art. 14 para. 40; Schroeter, Art. 14 para. 48. Contra Zachariasiewicz, 123-125 (arguing CISG should not impose a higher standard for incorporation than that imposed by EU Directives in the context of forum clauses).
81BGH 31 October 2001, CISG-online 617.

Referring Principles

Trans-Lex Principle: IV.3.2 - Inclusion of standard terms

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