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Part III Formation of The Contract, 12 Standard Terms

From: Global Sales and Contract Law

Ingeborg Schwenzer, Pascal Hachem, Christopher Kee

Content type:
Book content
Product:
International Commercial Law [ICML]
Published in print:
26 January 2012
ISBN:
9780199572984

From: Oxford Legal Research Library (http://olrl.ouplaw.com). (c) Oxford University Press, 2023. All Rights Reserved. Subscriber: null; date: 07 June 2023

Subject(s):
Performance of contract — Formation of contract

12  Standard Terms

  1. A.  General 12.01

  2. B.  Specific Rules on Standard Terms 12.03

  3. C.  Incorporation of Standard Terms 12.06

    1. I.  General 12.06

    2. II.  Incorporation by Reference 12.07

    3. III.  Incorporation by Practice and Usage 12.13

  4. D.  Transparency 12.16

    1. I.  General 12.16

    2. II.  Language 12.18

    3. III.  Surprising Clauses 12.20

  5. E.  Precedence of Negotiated Terms 12.25

  6. F.  Battle of the Forms 12.26

    1. I.  General 12.26

    2. II.  Last-Shot Rule 12.28

    3. III.  Knock-Out Rule 12.30

(p. 164) A.  General

12.01  The relevance of standard terms in domestic and international trade cannot be overestimated. The definition of the notion of ‘standard terms’ has traditionally focused on the intention of using pre-drafted terms for an indefinite number of contracts of a certain nature. This also implies that these terms have not been individually negotiated.1 Furthermore, some legal systems establish specific rules on contracts of adhesion where all the terms are pre-drafted.2 The more modern approach is to apply certain protective mechanisms solely relying on the fact that a term has not been individually negotiated.3 However, in substance, the same legal issues arise under all legal concepts. In the following the term ‘standard terms’ will be used encompassing all of these concepts.

12.02  Traditionally, the main purposes of standard terms have been to facilitate the performance of the contract and allocate contractual risks to the benefit of the party introducing the respective standard terms.4 Today, modern contract types as described above5 often do not fit into the scheme of traditional contract law. In addition, complex transactions involving a multitude of elements that could be counted among different types of contract may make the choice of the applicable default rule complicated and unpredictable. Standard terms tailored to the type of transaction in question bring about legal certainty in this regard by adapting—that is, modifying (p. 165) and derogating from—the default system.6 Furthermore, phenomena like the lex mercatoria show that standard terms, not necessarily drafted by the contracting parties but by organizations in certain areas of industry, in some ways have even outgrown their original function of facilitating business of the specific company using them and instead have become a legal instrument whose binding effect stands yet to be clarified.7 This chapter deals with the general requirements for standard terms to form part of a contract, as well as the famous ‘battle of the forms’.

B.  Specific Rules on Standard Terms

12.03  The legal systems differ considerably in their approach to standard terms. Whereas some legal systems nowadays have meticulously elaborated rules specifically relating to standard terms in general,8 others have only established special rules on standard terms as part of their consumer protection legislation9 and/or in relation to certain clauses, such as limitation of liability clauses. In this regard, Member States of the EU have to be mentioned specifically, as they have incorporated the EEC Directive on Unfair Terms in Consumer Contracts,10 which, however, does not lay down rules on the incorporation of standard terms. In most common law legal systems there is only sparse regulation of standard terms. Rather the general rules of contract law apply. The fact that a term has not been negotiated may, however, influence its appraisal as regards its incorporation, interpretation, and substantive control.

12.04  As regards the content of standard terms and their possible unfairness, historically these have been controlled indirectly by relying on questions of incorporation and interpretation.11 More specifically terms that were perceived to be unfair were eliminated on the grounds that they were ‘surprising’ or ‘unclear’, and thus not covered by the consent of the parties.12 These mechanisms have been labelled as covert tools and, as such, as unreliable tools.13 Today there is a strong tendency in many jurisdictions to openly scrutinize the substantive content of standard terms without reference to questions of incorporation and interpretation—that is, to treat these matters as questions of validity.14 However, as the incorporation and interpretation approach is still utilized by jurisdictions to varying extents, it is therefore considered in this chapter.

12.05  At the international level, the CISG does not contain specific rules dealing with standard terms. It is agreed as a very general rule that the incorporation of standard terms is subject to (p. 166) the default rules of contract formation laid down in Articles 14–24.15 However, the control of the content of standard terms is left with the applicable domestic law by virtue of Article 4, sentence 2(a).16 By contrast, the uniform projects establish specific rules on the incorporation of standard terms, in particular the battle of the forms.17

C.  Incorporation of Standard Terms

I.  General

12.06  All legal systems agree that standard terms to be incorporated into a contract must be introduced before the conclusion of the contract. Thus, where standard terms are supplied to the other party only subsequently, for example simultaneously with the delivery of the goods or with the invoice, they do not become part of the contract.18 The presentation of standard terms in this situation can only be regarded as an offer to modify an already existing contract.19

II.  Incorporation by Reference

12.07  No problems arise where standard terms are contained in the contract document itself, provided that the terms are set out above the signature. However, where the terms are not printed above the signature, they must be expressly referred to at the front of the document.20 This also applies where the standard terms are printed on the reverse side of the document. Naturally, where the front side makes reference to the reverse side, the reverse side must also be available; this is of relevance in case of transmission via facsimile for example.

12.08  Special problems arise where the standard terms are not handed over to the other party but only incorporated by reference. Some legal systems deny the incorporation of standard terms where the text has not been transmitted to the other party.21 A similar stance has occasionally been taken with regard to the CISG.22 It has, however, been suggested that at most this could only be applied to cases where the documents are sent by post.23

12.09  Most legal systems nowadays acknowledge incorporation of standard terms by reference. It is up to the co-contractant to enquire about the contents of the standard terms. The central point is that the co-contractant must have had the possibility to reasonably take notice of and record the standard terms.24 The current catchwords are ‘accessibility’ and ‘retrievability’. A very specific provision on this issue can be found in Article 6.234 Dutch CC which provides that this possibility has been offered if the other party has been informed that the standard terms can be (p. 167) accessed at the place of business of the party supplying the terms, at the designated chamber of commerce, or at a court where the terms have been deposited.

12.10  In recent times, incorporation by reference has been intensively discussed in relation to electronic commerce.25 As has been pointed out above, modern instruments on electronic commerce generally require that standard terms must be made available in a form that can be downloaded and printed.26 This holds true for contract formation via email as well as via websites.

12.11  Where a contract is concluded by email, it is certainly sufficient if the standard terms are attached by email. This would also satisfy the requirement established by some legal systems that the terms have to be sent to the other party. Whether a link to a website is sufficient must be decided on the facts of the particular case. For example, a communication containing a deep-link to the standard terms is more likely to suffice27 than a generic link to a website which then has to be searched.28 When considering those facts, the 1996 Guide to the UNCITRAL Model Law on Electronic Commerce may be helpful.29

12.12  Where contracts are directly concluded via a website some legal systems make a distinction between what has become known as click wrap agreements and browse wrap agreements. Click wrap agreements are those involving an electronic form presented on the seller’s website which require the buyer to click an ‘I agree’ or similar button to indicate assent to the standard terms of the seller.30 Browse wrap agreements are those involving an electronic form presented on the seller’s website which allow a buyer to make a purchase without necessarily reading the standard terms of the seller.31 The standard terms are available for the buyer to browse by clicking on a separate link. In these latter situations the incorporation of the standard terms will again depend on the way in which the link to the standard terms is presented or visible to the user.32 An extensive search can certainly not be expected.

III.  Incorporation by Practice and Usage

12.13  Standard terms may also be included by either practices already established between the parties or relevant usages in the respective area of trade.33

12.14  With regard to the first possibility, incorporation by practices established between the parties, a practice has only been established if the parties have repeatedly acted in the same manner—that is, incorporated standard terms in a certain way or of a certain kind more than once.34 (p. 168) The incorporation by practices established between the parties may, in particular, be of relevance where the necessary references have not been made.35

12.15  With regard to trade usages it is necessary to distinguish between incorporation of standard terms by trade usage and standard terms which themselves become trade usages.36 In the first case the trade usage only has effect with regard to the incorporation of the standard terms, whilst in the latter case no incorporation is required.37 Further, it should be noted that the control mechanisms for standard terms do not apply where the (former) standard term has become a trade usage.38 In both cases the general prerequisites for the parties being bound to a trade usage must be fulfilled.39 First, there must be a usage that certain standard terms are used throughout the relevant area of trade. Such a usage may be international, regional, or even local.40 However, this will hardly ever be the case where the standard terms have been unilaterally drafted by one party, but may regularly be the case with regard to trade terms drafted by third parties or institutions such as trade associations. For example, this is the case in Germany for the general conditions for the carriage of goods that have been jointly elaborated by German trade associations.41

D.  Transparency

I.  General

12.16  Part of the requirement that the co-contractant must be put in a position to take notice of the standard terms is that a reasonable person is able to read and understand them. This requirement may be called ‘transparency’. Thus, terms have to be drafted and formatted in a way that a normal person is able to read them without a magnifying glass. Furthermore, standard terms must be formulated in a way that a reasonable person, not legally educated, could grasp their content.

12.17  According to many legal systems the legibility requirement may include the drafter’s obligation to alert the adherent party of any important stipulation contained in the standard contract and which because of different circumstance may not be easily perceived by the adherent party. Such alert or remark may be made using special font characters or other signs or methods that help the relevant clause to distinguish from the rest of the contract. This is sometimes explicitly provided for in certain types of clauses. For example, according to USA § 2-316(2) UCC any clause purporting to exclude or modify the implied warranty of merchantability must (p. 169) specifically mention merchantability and must be conspicuous.42 Likewise, Guatemala’s commercial law requires that any waiver of a right will only be valid if it appears emphasized or in characters greater or different than those from the rest of the contract.43 Similar requirements may exist for arbitration clauses in some jurisdictions.44

II.  Language

12.18  Language problems, which have been addressed above, play a special role in the context of standard terms. In cross-border transactions the parties may use different languages in their standard terms. This can bring about problems for the incorporation of these terms. First of all, trade usages leading to a particular language generally used in the respective field of trade or practices established between the parties may already provide for the incorporation of the standard terms. Where this is not the case, incorporation of standard terms is possible where they are drafted in the language used by the parties during their negotiations.45 Otherwise, it may be necessary to notify the other party in the language of the negotiations and have it sign that notice.46 In other instances even though not drafted in the language of the negotiations, incorporation of the standard terms may be possible, where the standard terms are drafted in the native language of the recipient.47 Under the CISG it has also been held sufficient that the standard terms are drafted in a language the recipient understands well enough to satisfy the requirements of Article 8(1) CISG—that is, that it could not have been unaware of the intent of the drafting party.48 Furthermore, incorporation has been affirmed where the standard terms were drafted in a ‘world language’.49

12.19  The consumer protection legislations in some legal systems provide that standard terms have to be drafted in the national language, if the contract has been concluded there.50

(p. 170) III.  Surprising Clauses

12.20  It is unanimously held that although the other requirements for incorporation may be fulfilled, surprising clauses do not become part of the contract.51 Surprising clauses are those which the other party could not have reasonably expected. Such terms only become part of the contract if they have been expressly accepted by the other party.

12.21  The definition of what is a surprising term varies considerably among the legal systems. More often than not, when determining whether a clause is surprising, its unfairness is relevant. Thus, a term which is inconsistent with the prior negotiations of the parties, materially alters the character of the contract, imposes additional duties upon the other party, or deviates considerably from the otherwise applicable default system may come as a surprise.

12.22  The scrutiny of standard terms at the level of incorporation by the notion of surprising terms is more widely used where there is no or only little substantive control of unfair clauses. Thus, for example, the Swiss Supreme Court does not conduct any substantive control of unfair clauses but instead regularly holds unfair terms to be surprising. This amounts, in effect, to a covert substantive control of standard terms. In contrast German courts no longer base their analysis on the potentially surprising character of standard clauses, but rather on their unfair nature.52

12.23  Some legal systems apply a broader understanding of surprising clauses by incorporating issues of content, language, and presentation.53

12.24  With regard to the CISG it is disputed whether the issue of surprising clauses is one of formation or of validity. If the first position is correct then the CISG is applicable, while in the second case the applicable domestic law must be consulted. The one view distinguishes different scenarios. Where the clause is surprising due to its content, then domestic law applies with the CISG being the relevant standard for comparison. Functionally, control over the content of standard terms is a question of validity and thus left with the applicable domestic law (Article 4 sentence 2(a)).54 Where the surprising nature of the terms results from an odd presentation, such as extremely small print, Article 8 is the relevant standard.55 The preferable solution from a uniform law perspective is to adopt the formation approach, notwithstanding that in the long run open substantive control of terms is a better policy.

E.  Precedence of Negotiated Terms

12.25  It is generally understood that individually negotiated terms take precedence over standard terms.56 For one reason, individually negotiated terms are more likely to reflect the parties’ (p. 171) intention than standard terms.57 Furthermore, the use of standard terms should not be permitted to undermine agreed terms.58 This would constitute a venire contra factum proprium in those systems recognizing that concept.59

F.  Battle of the Forms

I.  General

12.26  Where two contracting parties use standard terms it is at least unlikely that the standard terms will be identical. On the contrary, each party will always try to limit the rights of the other party and at the same time extend its own rights. Therefore, the declarations of the parties—that is offer and acceptance—will hardly ever meet the standard of the so-called ‘mirror-image rule’ as described earlier.60 Even in those legal systems that allow non-material alterations of the offer by the acceptance, in practice the points addressed in standard terms will usually have to be considered material. As a result, the situation will usually be one where a purported acceptance constitutes a new offer. This situation is commonly referred to as ‘Battle of the Forms’.

12.27  Most legal systems use general principles of contract formation to solve these cases. There are only a few legal systems which have specifically legislatively addressed this issue.61 The dispute as to how to solve these cases has narrowed down to two views, the so-called ‘Last-Shot Rule’ and the ‘Knock-Out Rule’. The so-called ‘Best-Shot Theory’ has only received sparse support.62

II.  Last-Shot Rule

12.28  Following the technical mechanisms of contract formation, those of offer and acceptance and the mirror-image rule, the Last-Shot Rule provides that the ‘Battle of the Forms’ is won by the party ‘who fires the last shot’63—that is, the party which makes the last reference to its standard terms.64 This is a rather unfortunate approach as it presses the parties to repeatedly send their standard terms to each other. Thus, where no acts of performance have been started or completed (p. 172) the conclusion of a contract is denied.65 Where the contract is performed the last counter-offer is considered to have been accepted.66 Although this doctrine has been heavily criticized, it is still followed by the majority of legal systems.67

12.29  The converse approach has been taken by the Netherlands which provides for a First-Shot Rule. According to Article 6.225(3) CC, the second reference to standard terms only has effect if it rejects the acknowledgement of the first reference at the same time. The same result may be reached in other legal systems where the first standard terms contain an explicit rejection of any other standard terms supplied by the other party.68 It seems that only where the references to standard terms both reject each other that the Knock-Out Rule will be applied.

III.  Knock-Out Rule

12.30  Today there is a developing preference for the Knock-Out Rule.69 Although its wording has been criticized, USA § 2-207 UCC represents the first codification of this rule.70 This doctrine has also found its way into uniform projects71 in more recent domestic legislation. It builds on the observation, relevant to nearly all cases of diverging standard terms, that ‘there is a concluded contract but the forms vary’72 as the parties have reached consent and hold their contract to be valid. The gist of this rule is that diverging standard terms do not become part of the contract—they knock each other out—and are replaced by the default rule of the applicable law.73

12.31  The benefit of the rule is that it provides parties with a means to protect themselves from unpalatable terms without the concern that the steps they have taken to protect themselves will put at risk the entire formation of a contract.74 For example, if a party does not wish to arbitrate disputes it only needs to include a choice-of-forum clause in its own standard terms. Although this choice-of-forum clause may be knocked out, so would any arbitration clause in the other party’s standard terms. Dispute resolution is now a gap in the contract to be filled (p. 173) by the appropriate gap-filling rules. As arbitration requires an arbitration agreement, the gap-filling rules will not point to arbitration.

12.32  Still, the question of the basis for this doctrine needs to be addressed. Under traditional contract formation rules the Last-Shot Theory applies. However, the Knock-Out Rule can be based on the rules of dissent. Where the interpretation of the parties’ statements and conduct demonstrates a mutually sufficient intention to be bound—as will be particularly expressed by acts of performance—there is partial dissent and the gaps have to be filled by default provisions.75

12.33  Under the CISG the prevailing opinion bases the application of the Knock-Out Rule on Article 6 CISG, arguing that the parties have derogated from Article 19 CISG.76 This, however, presents problems as the high standard of Article 6 CISG in these cases often will not be met where no acts of performance have been commenced or completed.77 Parties could effectively escape bad deals by simply referring to the divergences of the standard terms. This possibility must be avoided. The Knock-Out Rule therefore should rather be based on Article 8 CISG.78 When interpreting the individual statements of the parties, Article 8(3) CISG will be of relevance in these cases. In accordance with this provision, common usage may be taken into account.79 In today’s commercial practice the Knock-Out Rule should be considered as such usage. This is evidenced by the uniform projects as well as by the fact that this rule is followed in an increasing number of jurisdictions.80 It follows that the usual interpretation of the individual declarations of the parties leads to the result that they value the conclusion of the contract itself over the incorporation of their standard terms.

12.34  It is sometimes suggested that in cases of diverging standard terms, clauses should remain valid where they are to the benefit of the co-contractant.81 This disputed approach has not found favour under the CISG.82

12.35  In some legal systems and under the uniform projects the Knock-Out Rule is not applied where one party has in advance (and not by way of standard terms) explicitly stated that it will not be bound by the co-contractant’s standard terms or where it has subsequently without undue delay made such statement to the other party.83 In these cases the conflicting standard terms hinder the entire conclusion of the contract.

Footnotes:

1  Art 2.1.19(2) PICC; Art 2:209(3) PECL; Aut OGH, 12 August 2004, 1Ob144/04i, Rummel/Rummel, § 864a, para 1, Koziol et al/Bollenberger, § 864a, para 1; Aze Art 417 CC; Che Schwenzer, para 44.01; Deu § 305(1)(1) CC; Est § 35(1) CO; Geo Art 342 CC; Ita Arts 1341(1), 1342(1) CC; Ltu Art 6.185 CC; Nld Art 6:231 CC; Tkm Art 356 CC; Tur Art 20 CO, Art 6 Consumer Protection Law.

2  Arabic/Middle East Al Gammal, p 100; Are Art 248 CC; Arm Art 444 CC; Bhr Art 58 CC; Blr Art 398 CC; Bra Art 54 CPL; Dza Art 110 CC; Egy Art 149 CC; Esp Art 1 Law 7/1998; Jor Art 204 CC; Kaz Art 389 CC; Kgz Art 387 CC; Kwt Art 81 CC; Lbn Art 172 CO; Lby Art 149 CC; Mar Safi, Al Qanun Al Madani, p 89; Mex Art 85 CPL; Prt Art 1 Law no 446/85; Qat Art 106 CC; Rus Art 428 CC; Sau Rayner, p 258; Syr Art 150 CC; Tjk Art 460 CC; Ukr Art 634 CC; Uzb Art 360 CC; Yem Art 214 CC.

3  EU Art 3(1) EEC Directive Unfair Contract Terms; Aus Part 2-3 Consumer Law (2010); Aut Rummel/Rummel, § 864a, para 10; Che Schwenzer, para 44.01; Chn Art 39 PRC CL; Deu §§ 305 et seq CC; Mng Art 200.2 CC; Tur Art 20-2 CO.

5  See paras 10.74 et seq.

7  See Schmidt-Kessel, NJW (2002), 3444.

8  Arabic/Middle East Al Gammal, p 100; Aut §§ 864a, 879(3) CC; Bra Arts 423–4 CC; Chn Art 39 PRC CL; Deu §§ 305 et seq CC; Esp Law no 7/1998 on the General Conditions on Contracts, incorporation of the Council Directive 93/13/EEC of 5 April 1993 on Unfair Terms in Consumer Contracts; Est §§ 35 et seq CO; Gmt Arts 1600 et seq CC, Arts 672, 673 Com C; Hnd Arts 724–30 Com C; Mar Safi, Al Qanun Al Madani, p 89; Mng Art 200.1 CC; Per Arts 1392–400 CC; Prt Law no 446/85 on General Contractual Terms of October 1985; Pry Arts 691 et seq CC; Sau Rayner, p 258; Slv Art 976 Com C; Tur Arts 20–5 CO.

9  Arg Lorenzetti, p 680; Aus Part 2-3 Consumer Law (2010) although contracts between merchants are in some cases within the scope of the legislation; Aut § 6 Consumer Protection Act; Deu according to § 310(1) CC, §§ 305(2), (3), 308, 309 CC do not apply with regard to standard terms which are used in contracts with an entrepreneur. But see BGH, 19 September 2007, NJW (2007), 3774 according to which a standard term which would—if used in a contract with a consumer—violate § 309 CC prima facie violates § 307 CC if used in a contract with an entrepreneur; Fra Arts L132-1 et seq Consumer Protection Law; Hkg Control of Exemption Clause Ordinance; Kor Adhesion Contract Act; Mex Arts 2, 99, 117 CPL: the definition of consumers includes those artisans and small companies who acquire products or services to integrate them into a production process, for the supply of products in all claims not exceeding MX$319,447.46; Twn Arts 11–17 Consumer Protection Law.

10  Council Directive 93/13/EEC of 5 April 1993 on Unfair Terms in Consumer Contracts.

12  See also paras 12.20 et seq.

14  See paras 21.34 et seq.

15  See BGH, 31 October 2001, CISG-online 617; Schlechtriem/Schwenzer/Schroeter, Art 14, para 33 citing numerous references.

16  See OGH, 7 September 2000, CISG-online 642; Schlechtriem/Schwenzer/Schwenzer/Hachem, Art 4, para 38.

17  Art 2.1.22 PICC; Art 2:209 PECL; Art II.-4:209 DCFR.

18  See eg Common Law (UK) Thornton v Shoe Lane Parking Ltd [1971] 2 QB 163 (HL).

19  See on the issue of modification Ch 14.

20  CISG, CA Paris, 13 December 1995, CISG-online 312; Aut OGH, 15 January 1997, 7Ob2407/96p, Rummel/Rummel, § 864a, para 2a; Deu OLG Hamburg, 19 September 1984, ZIP (1984), 1241, MünchKommBGB/Basedow, § 305, para 54; Zaf D & H Piping Systems (Pty) Ltd v Trans Hex Group Ltd [2006] SCA 31 (RSA).

21  See eg Esp Arts 5, 7 Law no 7/1998: terms must form part of the contract (that is by reference and by supplying a copy).

22  BGH, 31 October 2001, CISG-online 617; Schlechtriem/Schwenzer/Schroeter, Art 14, para 40.

23  Schlechtriem/Schwenzer/Schroeter, Art 14, para 44; Schwenzer/Mohs, IHR (2006), 241.

24  OHADA CCJA, arrêt no 12, Ohadata J-05-357, Recueil de jurisprudence de la CCJA, no 5, January–June 2005, volume 2, p 27; Common Law (UK) Chitty on Contracts, paras 12-014, 12-017; Aus Toll (FCGT) Pty Ltd v Alphapharm Pty Ltd (2004) 219 CLR 165 (HC); Aut Koziol et al/Bollenberger, § 864a, para 2, OGH, 27 March 2003, 2Ob43/03t; Aze Art 418 CC; Can Craven v Strand Holidays (Canada) 40 OR (2d) 186 (Ont CA 1982); Deu § 305(2) CC; Geo Art 343 CC; Ltu Art 6.185(2) CC; Mda Arts 712, 713 CC; Mng Art 200.3.2 CC; Tkm Art 357 CC.

25  For this issue see also paras 11.20 et seq.

26  See para 11.20.

27  Muñoz, p 125; Che Weber, pp 350 et seq; Deu BGH, 14 June 2006, NJW (2006), 2977.

29  1996 Guide to the UNCITRAL Model Law on Electronic Commerce, § 46-5.

32  Drahozal, 54 Am J Comp L (2003), 252 citing case law: Specht v Netscape Communications Corp, US Ct App (2nd Cir), 1 October 2002, 306 F 3d 17; Motise v America Online, Inc, US Dist Ct (SD NY), 30 November 2004, 346 F Supp 2d 563, 565; Register.com, Inc v Verio, Inc, US Ct App (2nd Cir), 23 January 2004, 356 F 3d 393, 401–2; Cairo, Inc v Crossmedia Servs, Inc, US Dist Ct (ND Cal), 1 April 2005, LEXIS 8450, at 13–14; Compare Hubbert v Dell Corp, II Ct App, 12 August 2005, LEXIS 808, at 14–15 (where an arbitration clause was enforced) with DeFontes v Dell Computers Corp, RI Super Ct, 29 January 2004, LEXIS 32, at 20–1 (where an arbitration clause was not enforced).

34  CISG Schlechtriem/Schwenzer/Schroeter, Art 14, para 70; Schlechtriem/Schwenzer/Schmidt-Kessel, Art 9, para 8; Witz/Salger/Lorenz/Witz, Art 9, para 17. But see OGH, 31 August 2005, CISG-online 1093, OGH, 6 February 1996, CISG-online 224, OLG Graz, 7 March 2002, CISG-online 669: Incorporation by or as practices also possible under the first contract where it is clear to one party that the other party will only conclude a contract on certain terms. Contra: Schlechtriem/Schwenzer/Schroeter, Art 14, para 70; Deu BGH, 4 May 1995, NJW (1995), 2225, Bamberger/Roth/Becker, § 305, para 80; Sgp Trans-Lin Exhibition Forwarding Pte Ltd v Wadkin Robinson Asia Pte Ltd [1996] 1 SLR 713 at 719.

35  CISG Schlechtriem/Schwenzer/Schroeter, Art 14, para 72; Deu MünchKommBGB/Basedow, § 305, para 91 with references to the constant practice of the BGH in this regard, eg BGH, 4 May 1995, NJW (1995), 2225.

36  For the distinction: Deu MünchKommHGB/Schmidt, Einl zu §§ 343 et seq, para 29; § 346, paras 51 et seq. For the latter case: Arm Art 443 CC; Kaz Art 388 CC; Rus Art 427 CC; Tjk Art 459 CC; Ukr Art 630 CC; Uzb Art 359 CC.

39  CISG OGH, 6 February 1996, CISG-online 224; Schlechtriem/Schwenzer/Schroeter, Art 14, para 73; Witz/Salger/Lorenz/Witz, Vor Arts 14–24, para 12; Arm Art 443 CC; Deu MünchKommBGB/Basedow, § 305, para 92; Kaz Art 388 CC; Rus Art 427 CC; Tjk Art 459 CC; Ukr Art 630 CC; Uzb Art 359 CC. On trade usages in general see Ch 27.

42  USA § 1-201(10) UCC (provides the definition of conspicuous and lays out the test to be used by courts ‘whether attention can reasonably be expected to be called to it’); Aus Part 2-3 s 24(2), (3) Consumer Law (2010) (allowing courts to consider whether a term is transparent in considering the fairness of a term in standard term consumer contracts).

43  Gmt Art 672(2) Com C.

44  See for an interesting example Ind M R Engineers v Som Datt Builders MANU/SC/1150/2009 where the court held that even where there was no express mention of incorporating the arbitration clause, the reference to the terms of a trade or professional association would have the effect of incorporating the arbitration clause. However, where the reference was to another general agreement, the arbitration clause can only be incorporated by express mention. See also Eng Haba Sinai ve Tibbi Gazlar Isthisal Endustri A v Sometal SAL [2010] EWHC 29.

45  For the question when a language is the language of the negotiations see with regard to the CISG, LG Memmingen, 13 September 2000, CISG-online 820; Schlechtriem/Schwenzer/Schroeter, Art 14, para 62; Witz/Salger/Lorenz/Witz, Vor Arts 14–24, para 13; Aut Koziol et al/Bollenberger, § 864a, para 2; Deu Bamberger/Roth/Becker, § 305, para 63.

46  See Aut OGH, 16 April 2004, 1Ob30/04z.

47  See therefore Hkg Art 11(4) Control of Exemption Clause Ordinance according to which, in determining whether a contract term or notice satisfies the requirement of reasonableness, the court or arbitrator shall have regard in particular to whether, inter alia, the language in which the term or notice is expressed is a language understood by the person as against whom another person seeks to rely upon the term or notice.

49  CISG OGH, 17 December 2003, CISG-online 828, OLG Innsbruck, 1 February 2005, CISG-online 1130; OLG Linz, 8 August 2005, CISG-online 1087; LG Göttingen, 31 July 1997, CISG-online 564, Schwenzer/Mohs, IHR (2006), 241. Against this criterion Schlechtriem/Schwenzer/Schroeter, Art 14, para 66; Schlechtriem/Schwenzer/Schmidt-Kessel, Art 8, para 54a; Arg National Commercial Court of Appeals, Quilmes Combustibles, SA v Vigan, SA, 15 March 1991; Deu for B2B contracts OLG Hamburg, 1 June 1979, NJW (1980), 1233.

50  See eg Mex Art 85(1) CPL.

51  Art 2.1.20 PICC; Common Law (UK) Chitty on Contracts, para 12-015; Aut § 864a CC; Aze Art 419 CC; Che BGer, 28 October 2008, BGE 135 III 1, 7, Schwenzer, para 45.07; Deu § 305c(1) CC; Geo Art 345 CC; Ltu Art 6.186 CC; Mda Art 715 CC; Mng Art 200.5 CC; Prt Art 8 Law no 446/85; Tkm Art 359 CC; Tur 21(2) CO, Atamer, Genel İşlem Şartları Denetimde Yeni Açılımlar, p 325; Rumpf, § 27, paras 98 et seq; USA § 211(3) Restatement (2d) of Contracts; Zaf Bok Clothing Manufacturers (Pty) Ltd v Lady land (Pty) Ltd (1982) 2 SA 365 reported by Forte, Battle of Forms, p 107.

53  Art 2.1.20(2) PICC; Aut § 864a CC; Deu BGH, 17 May 1982, NJW (1982), 2310 (presentation); Bamberger/Roth/Jacobs, § 305c, para 7; MünchKommBGB/Basedow, § 305c, paras 11, 17; Hkg Art 3 Control of Exemption Clause Ordinance: once a term is categorized as a ‘surprising term’ by failing the reasonableness test, it may become part of the contract upon a fair and reasonable notice, assuming the term is itself valid. Fisher/Greenwood, pp 171ff: where a contract contains a particularly onerous or unusual clause, extra steps must be taken to bring it to the other party’s notice; Ltu Art 6.186 CC; Pol Art 385(2) CC; Prt Art 8 Law no 446/85; Sgp L & M Concrete Specialists Pte Ltd v United Eng Contractors Pte Ltd [2000] 4 SLR 441, 447: it might require distinct and specific words to incorporate an arbitration clause into a contract.

55  See ibid.

56  CISG, Schlechtriem/Schwenzer/Schmidt-Kessel, Art 8, para 64; Art 2.1.21 PICC; Arg Supreme Court of Justice of Buenos Aires, Petriga de Portela v Prov de Buenos Aires, cited in Lorenzetti, p 685, n 18; see also Alterini, p 131: noting that the Art 1197(3) Argentinean Project for a Unique Code of 1987 had envisaged the validity of the special clauses over the general clauses, though the latter had not been cancelled, and of the incorporated clauses over the pre-existent clauses; Aut OGH, 26 June 2001, 1Ob150/01t, Rummel/Rummel, § 864a, paras 4 et seq, Koziol et al/Bollenberger, § 864, para 2; Aze Art 418(2) CC; Che BGer, 24 October 1967, BGE 93 II 317, 325 et seq; Deu § 305b CC; Esp Art 6 (1) Law no 7/1998; Geo Art 342 CC; Est § 38 CO; Gmt Art 672 (3) Com C; Hnd Art 728 Com C; Mda Art 714 CC; Per Art 1400 CC: dictating that the clauses added to the standard contract prevail over the original when they are incompatible, although the original ones had not lapsed; Pol Art 385(1) CC; Prt Art 7 Law no 446/85: dictating that terms which are specifically agreed prevail over any general contractual terms, even when set out in forms signed by the parties; Slv Art 976 Com C; Tkm Art 356 CC; USA § 203(d) Restatement (2d) of Contracts.

59  On venire contra factum proprium see para 47.16.

60  See para 10.26.

61  Art 2.1.22 PICC; Art 2.209 PECL; Art II.-4:209 DCFR; Deu § 306(2) CC; Est § 40 CO; Pol Art 385 CC. See also USA § 2-207 UCC which, however, is not specifically designed for standard terms but for conflicting terms in general.

63  Quotes from Honnold, para 170.3. Under domestic German law this doctrine is called ‘Theorie des letzten Wortes’ (Last-Word Theory). CISG, Herber/Czerwenka, Art 19, para 18 admit that this result may not be helpful in practice. For its application under the CISG see OLG Köln, 24 May 2006, CISG-online 1232; Bianca/Bonell/Farnsworth, Art 19, para 2.5; MünchKommHGB/Ferrari, Art 19 CISG, para 15; Honsell/Schnyder/Straub, Art 19, para 37; Enderlein/Maskow/Strohbach, Art 19, para 10, Murray, 20 J L & Com (2000), 44.

64  Art 2.1.22, Comment 2, PICC; Common Law (UK) Chitty on Contracts, para 2-037 (generally discussing notion); Can Waddams, paras 72 et seq; UK British Road Services Ltd v Arthur V Crutchley & Co Ltd [1968] 1 Lloyd’s Rep. 271.

66  CISG, OLG Koblenz, 4 October 2002, CISG-online 716; OLG München, 11 March 1998, CISG-online 310; MünchKommHGB/Ferrari, Art 19, para 15; Herber/Czerwenka, Art 19, para 18.

67  CISG, Schlechtriem/Schwenzer/Schroeter, Art 19, para 25; Honnold/Flechtner, § 170.3; Staudinger/Magnus, Art 19 CISG, para 24; MünchKommBGB/Gruber, Art 19 CISG, para 24; Schwenzer/Mohs, IHR (2006), 244; Schlechtriem, Internationales UN-Kaufrecht, para 92; Kröll/Hennecke, RIW (2001), 739. But see MünchKommHGB/Ferrari, Art 19 CISG, para 15. Common Law (UK) Chitty on Contracts, para 2-037 (noting cases may vary); Arm Art 459 CC; Blr Art 413 CC; Deu BGH, 20 March 1985, NJW (1985), 1839, BGH, 23 January 1991, NJW (1991), 1606, Bamberger/Roth/Becker, § 305, para 81; Hkg Manohar Chugh T/A Electric & Electronic Industries v Oka Electronics Ltd [1991] 2 HKC 1; Hun Art 213(2) CC; Rus Art 165(1) CC; Sgp Hock Chuan Ann Construction Pte Ltd v Kimta Electric Pte Ltd [2000] 2 SLR 519.

68  Common Law (Eng) Butler Machine Tool Co Ltd v Ex-Cell-O Corp (England) Ltd [1979] 1 WLR 401 (CA); Deu BGH, 24 October 2000, NJW-RR (2001), 485; MünchKommHGB/Schmidt, Einl zu §§ 343–72, para 30; Hkg Fisher/Greenwood, pp 51ff.

69  CISG, see BGH, 9 January 2002, CISG-online 651; Schlechtriem/Schwenzer/Schroeter, Art 19, para 20; Witz/Salger/Lorenz/Witz, Art 19, para 16; Brunner, Art 4, para 44; Schwenzer/Mohs, IHR (2006), 244; Aut OGH, 24 April 2003, 6Ob306/02x, Rummel/Rummel, § 864a, para 4, Koziol et al/Bollenberger, § 864a, para 8; Che Schwenzer, para 45.15; Chn Cui Jianyuan, General Contract, p 156; Deu BGH, 20 March 1985, NJW (1985), 1839, BGH, 23 January 1991, NJW (1991), 1606, MünchKommBGB/Kramer, § 154, para 7, Staudinger/Schlosser, § 305, paras 206 et seq, Bamberger/Roth/Becker, § 305, para 81; Est § 40(1) CO; Fra Cass Com, 20 November 1984, Bull civ IV, no 313, p 253.

70  Following Roto-Lith, Ltd v FP Bartlett & Co, US Ct App (1st Cir), 15 January 1962, 297 F 2d 497 that provision of the UCC was for a considerable period of time interpreted in a way so as to effectively establish the Last-Shot Rule. That decision was then overruled in Ionics, Inc v Elmwood Sensors, Inc, US Ct App (1st Cir), 8 April 1997, 110 F 3d 184 at 187 and is since then read in the sense of the Knock-Out Rule.

71  Art 2.1.22 PICC; Art 2:209 PECL; Art II.-4:209(1) DCFR.

72  Quote from Butler Machine Tool Co Ltd v Ex-Cell-O Corp (England) Ltd [1979] All ER 965 (CA) at 968 per Lord Denning.

73  See Che Schwenzer, paras 45.14 et seq; Deu § 306(2) CC.

74  See for discussion Mootz, 4 J L & Pol’y for Info Soc’y (2008), 278. Mootz describes §2-207 UCC as allowing traders to raise a force-field around themselves.

76  See BGH, 9 January 2002, CISG-online 651; AG Kehl, 6 October 1995, CISG-online 162; Schlechtriem/Schwenzer/Schroeter, Art 19, para 28; Honnold, para 170.4; Soergel/Lüderitz/Fenge, Art 19 CISG, para 5; MünchKommBGB/Gruber, Art 19 CISG, para 26; Witz/Salger/Lorenz/Witz, Art 19, para 17; Bamberger/Roth/Saenger, Art 19 CISG, para 3.

77  For this reason, a conclusion of the contract is often denied in this scenario, see Witz/Salger/Lorenz/Witz, Art 19, para 17; MünchKommBGB/Gruber, Art 19 CISG, para 26. Contra Schlechtriem, Kolloquium, p 10.

78  See Kröll/Hennecke, RIW (2001), 744.

79  In this respect Art 8(3) CISG does not require Art 9(2) CISG to be satisfied, see Schlechtriem/Schwenzer/Schmidt-Kessel, Art 8, para 45; Schlechtriem, Internationales UN-Kaufrecht, para 56; but see Witz/Salger/Lorenz/Witz, Art 8, para 12.

80  See for the USA Ionics, Inc v Elmwood Sensors, Inc, 8 April 1997, US Ct App (1st Cir), 110 F 3d 184, overruling Roto-Lith, Ltd v FP Bartlett & Co, 15 January 1962, US Ct App (1st Cir), 207 F 2d 497 when interpreting § 2:207 UCC. For further references see Schlechtriem/Schwenzer/Schroeter, Art 19, para 23.

82  cf BGH, 9 January 2002, CISG-online 651 where the court did not uphold a clause of the buyer limiting seller’s liability that was even more favourable to the seller than the seller’s own clause. Concurring Schlechtriem/Schwenzer/Schroeter, Art 19, para 35.