Are you consciously fighting your ‘battles of the forms’?

If you make use of general terms and conditions, you will undoubtedly come across what is known as the ‘battle of the forms’, even if you may not be aware of this on a day-to-day basis.

If you declare your general conditions of sale applicable in an order confirmation, and the other party declares its general purchase conditions applicable in its order, which general conditions will then apply? This is what we refer to as the ‘battle of the forms’.

Dutch contracting parties

If this battle is fought between Dutch parties, it is relatively straightforward. You must take care, though, that you act in the correct manner to ensure your general conditions win.

In the Netherlands, the ‘first shot’ rule applies. The party who refers first to its general conditions wins, unless the other party explicitly rejects the conditions of the first party and declares its own conditions applicable. Incidentally, it is not sufficient merely to include a standard sentence in general conditions or in the small print under your order confirmation, stating that the general conditions of the other party are explicitly rejected.

You are therefore in a strong starting position if you are the first. You can already include a reference to your general conditions when requesting quotes.

If you don’t do so and receive a quote in which the other party is the first to declare its general conditions applicable, it would be wise specifically to state in your order that the general conditions referred to in the quote are not acceptable to you, and that your own general conditions apply instead.

This chess game can be repeated in subsequent correspondence. For example, the other party may also reject your general conditions in its order confirmation, so you will have to take action again. If that is the case, it is probably better to contact the other party to agree explicitly which conditions and any amendments to them will apply to your mutual relationship. If you regularly do business with the same party, you could lay down your agreements in a framework agreement, for example, under which orders can be placed.

International trade

It becomes more difficult if this battle has to be fought at an international level. There are countries that follow the ‘last shot’ rule, where the last party to refer to its general conditions wins. This could be at the time the final invoice is sent, for example.

There is also the ‘knock-out’ rule, where both sets of general conditions are applicable to the extent that their contents are the same. Provisions that conflict with each other are deleted in both sets of general conditions, and any gaps that this produces are filled with additional provisions, which may also include those under international law.

An extra complicating factor in this international arena is that it is not immediately clear what law is applicable. If a Dutch party and a French party do business with each other, the Dutch party will then believe that he is in the right with his ‘first shot’, while his French co-contracting party believes the same with his ‘last shot’ reference. If they cannot agree, first it must be decided which court has jurisdiction to hear the dispute. The Dutch party will undoubtedly have declared Dutch law applicable, and the French party will have done the same with French law. In such a case, it will depend on the rules of international private law of both France and the Netherlands as to which court will settle the matter between these two parties.

Fortunately, you and your business contacts can choose which court may hear any future dispute. You must lay this down beforehand in writing, though. We propose that you also lay down at that time the other conditions straight away as this will avoid any battles.

We will be pleased to help you in your preparations for your battles. If you want to win the battle, do give us a call.