Battle of forms
If two entrepreneurs from different countries do business with each other and both use general terms and conditions, there is not only the question of which general terms and conditions apply, but also the question of which legal system should be used to determine which general terms and conditions apply. This is called the “battle of forms”. This issue is discussed in more detail in another article. Once the applicable law has been determined, the applicable standard terms and conditions can be determined.
German general terms and conditions
If it is determined that German law applies, the German rules on the applicability of standard terms will apply. At first sight, the legal texts in Dutch and German law are similar. However, German law is much stricter. General terms and conditions are quickly established. General terms and conditions are all provisions that are drafted for multiple use. In practice, it is not necessary for these terms and conditions to be used more than once. A clause is considered to be used if one party makes a proposal during the negotiations and unilaterally insists that this clause should apply.
In other words, all proposals made by the initiating party will soon be considered to be standard terms and conditions. This is the case even if the document does not have the appearance of a STC but is, for example, incorporated in a model contract.
A term is not a general condition if it has been negotiated in detail between the parties. This is different from “aushandeln”. The difference with the latter is that in “verhandeln” both parties have presumably had a chance to flesh out the provision themselves. If the other party does not get this chance, then it is a case of general terms and conditions.
Case law gives several examples:
- If a company puts a logo on the document, this is an indication that there are general terms and conditions.
- It is not enough to send a contract to another party with a request for comments. This is “verhandeln” and not “aushandeln”.
- It is not enough for the parties to make a statement that they have “ausgehandelt” the terms. What matters is the actual situation.
Meaning of general terms and conditions
Why is it so important to know whether there are general terms and conditions or an individual contract? According to the law, general terms and conditions are void if they are contrary to the principles of reasonableness and fairness and unreasonably disadvantage the other party. This is very quickly the case. By comparison, all clauses that would be void under Dutch law in a B2C relationship are also void under German law in a B2B relationship.
Example: Exclusion of liability
The latter makes the exclusion of liability in German general terms and conditions almost impossible and subject to strict conditions. This is in contrast to Dutch law, which is accustomed to limiting or excluding liability except in cases of intent or gross negligence. If you want to limit or exclude liability in German general terms and conditions, you will therefore have to ‘negotiate’ this together. After all, in German law – as in Dutch law – a lot is possible in individual agreements under the freedom of contract.
Entering the German market
If you want to enter the German market, you cannot have your Dutch general terms and conditions translated and copied one to one. It is important to seek advice to avoid your general terms and conditions becoming null and void.
Do you have any questions on this topic or would like more information? If so, please contact Anne-Marie van Dijk or Stephan Diel of Team German Desk.