Netherlands 21 January 2009 District Court Utrecht (Sesame seed case) [translation available]
[Cite as: http://cisgw3.law.pace.edu/cases/090121n1.html]
DATE OF DECISION:
CASE NUMBER/DOCKET NUMBER: LJN BH0723; 253099 / HA ZA 08-1624
CASE HISTORY: Unavailable
SELLER'S COUNTRY: Netherlands (defendant)
BUYER'S COUNTRY: Germany (plaintiff)
GOODS INVOLVED: Sesame seeds
NETHERLANDS: District Court Utrecht 21 January 2009
(_____ GmbH v. Quote Foodproducts BV)
Case law on UNCITRAL texts [A/CN.9/SER.C/ABSTRACTS/124]
CLOUT abstract no. 1202
Reproduced with permission of UNCITRAL
Abstract prepared by Jan Smits, National Correspondent, with the assistance of Esther van Schagen
The question that arises in this case is whether the standard terms and conditions of the seller are applicable to the contract.
Several deliveries of sesame seeds took place between the Dutch seller (the defendant) and the German buyer (the claimant). When a dispute arose between the parties, the seller argued that its terms and conditions would apply to the agreement and objected to the Dutch Court jurisdiction over the case. The buyer held the opposite. The Court, provisionally assuming the existence of an agreement, and referring to the decision of the Dutch Supreme Court of 28 January 2005, NJ 2006, 517, found that the CISG was applicable, as the case concerned the sale of movables between parties having their place of business in contracting States of the Convention.
The Court found that the terms and conditions can only be applicable if the seller has stipulated their applicability in its offer and the offer has been accepted by the buyer. The inclusion of standard terms and conditions should be recognizable for the buyer, in accordance with article 8(2) and (3) CISG. In the absence of any existing practice between the parties, the mere reference to the general terms and conditions is not sufficient to incorporate them in the contract. This reasoning applies to the case at hand, since the parties never conducted business with one another before.
Supporting the arguments of the buyer, the Court also noted that there is a difference “between national and international agreements concerning the way in which the applicability of general terms of business is accepted”. In the opinion of the Court, the seller did not sufficiently motivate that the application of standard terms and conditions is customary in international trade, although it is customary of German suppliers. Finally, the Court found that the seller should have given the buyer the opportunity to become apprised of its standard terms and conditions, for example by providing the buyer with their text. With this regard, the Court also referred to German case law (mentioning Bundesgerichtshof 31 October 2001, VIII ZR 60/01) on the applicability of standard terms and conditions, which stresses that those are applicable if their text is provided to the buyer before the conclusion of the contract.
For this reason the Court rejected the seller's claim of lack of jurisdiction.Go to Case Table of Contents
APPLICATION OF CISG: Yes
APPLICABLE CISG PROVISIONS AND ISSUES
Key CISG provisions at issue:
Classification of issues using UNCITRAL classification code numbers:
7B1 [Materials for interpretation of Convention: international case law and scholarly studies]; 8B ; 8C [Interpretation of party's statement or other conduct: interpretation based on objective
standards (understanding of reasonable person of same kind as other party in the same circumstances
as the other party); Interpretation in the light of surrounding circumstances]; 14A [Criteria for an offer (basic criterion): intention to be bound in case of acceptance]
7B1 [Materials for interpretation of Convention: international case law and scholarly studies];
8B ; 8C [Interpretation of party's statement or other conduct: interpretation based on objective standards (understanding of reasonable person of same kind as other party in the same circumstances as the other party); Interpretation in the light of surrounding circumstances];
14A [Criteria for an offer (basic criterion): intention to be bound in case of acceptance]
Reproduced with permission of European Journal of Contract Law (2/2009) 104
EDITOR: Sonja Kruisinga, Utrecht University
Rechtbank Utrecht (Sesame seed case) 21 January 2009
FACTS OF THE CASE
This case concerned a contract for the sale of sesame seeds by a Dutch seller to a German buyer. The seller argued that its general conditions (the so-called "N.Z.V. conditions") had become part of these contracts. The buyer contested this, however.
The court held that the CISG was applicable to these contracts. Furthermore, the court held that the question as to whether general conditions have become part of an international sales contract has to be answered on the basis of provisions in the CISG, as follows from the decision by the Netherlands Supreme Court (Hoge Raad 28 January 2005, NJ 2006, 517). The court held that in answering the question as to whether general conditions have become part of the contract, the same criteria have to be applied as also apply to the conclusion of contracts in general. The general conditions at hand can only become part of the contract if the application thereof was stipulated by the seller and accepted by the buyer (Article 14 et seq. CISG).
As there was no established business relationship between the parties, the court held that a mere reference to the general conditions by the seller was not sufficient to make these conditions part of the contract. In order to ensure the application of the general conditions, the seller should have offered the buyer a reasonable opportunity before or at the time of concluding the contract in order to become aware of the (content of the) general conditions, for example by handing over these conditions to the buyer. Without such an opportunity, a (foreign) buyer cannot reasonably understand what it is agreeing to, if it indeed realises at all that the reference, in Dutch, is meant to be a reference to general conditions.
In this case, the seller did not hand over its general conditions to the buyer. It is also evident that the seller did not discuss the content of these conditions with the buyer before the conclusion of the contract. This led the court to the conclusion that the buyer did not have a reasonable opportunity to become aware of the general conditions and could not reasonably have understood that these general conditions were part of the offer by the seller.
The court referred to the German case law (for example, a decision by the German Supreme Court, Bundesgerichtshof 31 October 2001) on the application of general conditions on the basis of the CISG, which emphasises that general conditions will only be applicable if the text of such conditions is handed over to the offeree before or at the time of the conclusion of the contract. Therefore, the court held that it cannot be said that the parties had reached any agreement on the application of the seller's general conditions.
This is one of the first cases decided by the courts in the Netherlands in which a court, when applying the CISG, has referred to a decision by a foreign court on the basis of the CISG. The Dutch District Court followed the German approach, according to which, in general, general conditions will only be applicable if the test of such conditions is handed over to the offeree before or at the time of the conclusion of the contract.Go to Case Table of Contents
CITATIONS TO OTHER ABSTRACTS OF DECISION
CITATIONS TO TEXT OF DECISION
Original language (Dutch): Netherlands case law website <http://www.rechtspraak.nl/>
Translation (English): Text presented below
CITATIONS TO COMMENTS ON DECISION
UnavailableGo to Case Table of Contents
Case text (English translation) [second draft]
Queen Mary Case Translation Programme
21 January 2009 [253099 / HA ZA 08-1524]
Translation [*] by Thomas van Hövell [**]
[Company A] GmbH of Germany, Plaintiff in the main action (hereinafter referred to as "[Buyer]") vs. Quote Foodproducts of Netherlands, Defendant in the main action (hereinafter referred to as "[Seller]"):
1. THE PROCEDURE
1.1 The course of the procedure can be seen from the summoning of parties, the memorandum of [Seller], including the incidental claim by [Seller] that the court lacks of jurisdiction, and the incidental memorandum of [Seller].
1.2 Finally, the verdict determined on the incidental claim.
2. THE FACTS
2.1 [Buyer] is a German company that develops and produces commodities for baking products. [Seller] is a Dutch importer and supplier of tropical and subtropical fruits, nuts and seeds.
2.2 On 2 October 2007, [Seller] sent an order confirmation to [Buyer], which states inter alia:
2.3 On 23 October 2007, [Seller] sent an order confirmation to [Buyer], which states inter alia:
"(…) CONFIRMATION OF ORDER
(…) Date: 23 October 2007
Order number: 42205
(…) This is to confirm that today was sold:
Seller: Quote Foodproducts B.V.
Buyer: [Company A] GmbH
Goods: 3920 Sesame seeds, peeled per 22.68 kg
Quantity: 1,764 bags 40,007.52 kg
Price: Euro 1.07 per kg
Delivery terms: Free at domile - loaded truck at H1
Delivery time: May 2008 - October 2008
Payment: 30 days net
Conditions of sale: N.Z.V. Conditions (Deposited Jurisdiction Court Amsterdam no. 233/1933). Conditions are deposited for inspection. They will be forwarded free of charge immediately on request.
The N.Z.V. conditions apply to all our agreements."
2.4 The conditions to which the order confirmations of 2 and 23 October 2007 refer, the N.Z.V. conditions, were not handed over or sent to [Buyer] by [Seller].
3. THE DISPUTE
3.1 [Seller] requests the court to find that the court does not have jurisdiction. [Buyer] conducts its defense. The positions of the parties will hereinafter be looked into more closely when relevant.
4. THE JUDGMENT
- Preliminary question
4.1 [Seller] has made the review of its incidental claim of lack of jurisdiction dependent on the answer to the question whether agreements had been reached between parties. However, this question cannot be answered in the light of the assessment of the proceedings, but needs to be answered in the main action.
The Court understands that [Seller] did not want to compromise its defense (in the main action), which entails that agreements had not been reached between the parties. For now, the court is of the opinion that agreements were reached between the parties. From the pleadings of both counsel, the court deduced that [Seller] delivered part of the sesame-seed order which [Buyer] demanded and paid for. In principle, it is in that case logical to conclude that parties have reached agreement. The question at hand is according to the provisional judgment of the court whether the general terms of business that [Seller] used, the N.V.Z. conditions, are part of the agreements reached between the parties.
- The core of the dispute and the judicial frame
4.2 It needs to be decided whether the N.Z.V. conditions apply to the agreements reached between the parties. This question must be judged pursuant to the provisions of the Vienna Convention on Contracts for the International Sale of Goods (hereinafter: CISG); this follows from the judgment of the Supreme Court of 28 January 2005, NJ 2006/517. The purchase-agreements between parties concern after all moveable goods and the parties are established in The Netherlands and Germany. These States are both parties to the CISG.
4.3 When answering the question whether the N.Z.V. conditions apply, the standards that generally apply to the formation of an agreement have to be applied in this case also. The applicability of the N.V.Z. conditions can only be considered as being accepted in so far as the applicability is included in the offer by [Seller] and accepted by [Buyer] (article 14 CISG). To include the general terms of business in an offer, it has to be known to the other party that the user wants to include these terms in the agreement. Hereby, the understanding a reasonable person of the same kind as the other party would have had of the offer is decisive (article 8(2) CISG). When determining this understanding, all of the circumstances of the case should be taken into consideration, including the negotiations, any practices which the parties have established between themselves, usages and any subsequent conduct of the parties (article 8(3) CISG).
- Positions of the parties
4.4 The following positions of [Seller] are the basis of the [Seller]'s incidental claim of lack of jurisdiction. In October 2007, the parties reached oral agreements on two occasions for the sale of sesame-seed and the conditions under which the sale would take place. The oral agreement has been confirmed in the order-confirmations. A reference to the general terms of business in an order-confirmation is customary in international trade. [Buyer] acted as an international entrepreneur and should therefore have understood that [Seller] would only be legally bound if the N.Z.V. conditions applied to the contract. [Seller] could therefore suffice with a reference to the general terms of business, according to [Seller].
4.5 [Buyer] pleads, on the other hand, that the parties never orally mentioned the general terms of business. The oral agreement contained the other conditions mentioned in the order-confirmation. Furthermore, [Buyer] pleads that it did not understand the reference in the order-confirmation and that it should not have been expecting the use of general terms of business. In the light of the above, [Buyer] refers to a decision by the German Bundesgerichtshof of 31 October 2001, from which stems that general terms of business can only be part of an offer if they are attached to the offer or if the terms are made available in another way to the party to which the offer is made. According to [Buyer], the general terms of business were not attached to the offer of [Seller] and were not part of the offer. According to [Buyer], it is not a custom in the international trade to make use of general terms of business when concluding agreements.
4.6 To be able to decide that [Buyer] is legally bound to the N.Z.V. conditions, it is at least required that [Buyer] was able to understand the reference to these conditions. Whether [Buyer] was able to understand the reference depends on the relationship between the parties.
4.7 From the positions of the parties, it can be concluded that the parties conducted business with one another for the first time in October 2007. This means that the applicability of the N.Z.V. conditions cannot be derived from a customary course of business between parties, as that did not (yet) exist in October 2007.
4.8 Furthermore, the court is like [Buyer] of the opinion that there is a difference between national and international agreements concerning the way in which the applicability of general terms of business is accepted. In the light of the defense of [Buyer] -- that the circumstance that German suppliers in their business relationships with buyers usually refer to general terms of business, does not mean that the use of general terms of business is also customary in the international trade -- [Seller] has not proved its position sufficiently, that it is customary in the international trade to conclude agreements under the applicability of general terms of business. After all, [Seller] only put forward that German suppliers of [Buyer] also made use of general terms of business.
4.9 Considering the above-mentioned case, it cannot be concluded that [Seller] could suffice with a reference to its general terms of business. For these general terms of business to apply, [Seller] should have offered a reasonable possibility for [Buyer] to come to terms with the (content of the) N.Z.V conditions, for example, by making these general terms of business available or mentioning the relevant provisions of the general terms of business during negotiations. Without such a possibility, a (foreign) opposite party cannot understand well enough to what it is declaring to agree to, even if it is aware that with the (Dutch) reference to "N.Z.V. condities" a reference is meant to the general terms of business.
4.10 In the present case, it is certain that [Seller] did not make the general terms of business available to [Buyer]. It was not claimed nor did it appear that [Seller] prior to the conclusion of the agreement discussed with [Buyer] the content of the N.Z.V. conditions, more specific the arbitration clause. This leads to the judgment of the court that it cannot be concluded that [Buyer] has had a reasonable possibility to take note of the content of the N.Z.V. conditions and that [Buyer] should have understood that these general terms of business were part of the offer of [Seller].
4.11 Also in German jurisprudence (such as the judgment of the Bundesgerichtshof of 31 October 2001, VIII ZR 60/01) concerning the applicability of general terms of business under the CISG, it is emphasized that general terms of business only apply if the text of the conditions is made available to the offeree. In the judgment of the court, this means that [Buyer], a German party, should not have understood that the above described course of business (see 2.2 to 2.4) of [Seller], a Dutch party, resulted in an offer based on the applicability of the [Seller]'s general terms of business.
4.12 In conclusion, the court finds that it cannot be established that the parties have reached any agreement on the applicability of the N.V.Z. conditions to agreements concluded between parties which entailed the delivery of sesame-seed. Therefore, the arbitration clause which is included in the N.Z.V. conditions cannot be held against [Buyer]. So it cannot be concluded that a valid arbitration agreement has been reached.
Because [Buyer] is a German party and [Seller] is Dutch, when dealing with the lack of a valid arbitration clause the jurisdiction of the court can be found in the "Council Regulation (EC) No 44/2001 of 22 December 2000 on Jurisdiction and the Recognition and Enforcement of Judgments in Civil and Commercial Matters (Brussels I)" (hereinafter: the EEX Regulation). It follows from the general rule of article 2 subsection 1 EEX Regulation that persons domiciled in a Member State, whatever their nationality, may be sued in the courts of that Member State. This means that, as [Seller] is established in Bosch en Duin, community Zeist of The Netherlands, the court of Utrecht is a competent court and is authorized to decide the dispute.
4.13 [Seller] will be ordered to pay the costs of these proceedings as it is the party that has been judged to be wrong.
5. THE JUDGMENT IN THE MAIN ACTION
5.1 An appearance before the court is ordered to gain information about the main case and to investigate whether parties can agree on one or more points. During this a possibility of reference to a mediator can be discussed.
5.2 The court points out that from a non-attendance of a party to this appearance before the court the conclusions -- also to the disadvantage of this party-- can be drawn that it deems appropriate.
5.3 The standard course of business during the case at appearance is that the following subjects will in principle be included. The judge will begin with a number of formalities. After which the judge will ask questions if necessary about the facts and views of the parties of which understanding has to be gained to come to a conclusion.
5.4 In principle, the opportunity to plea will not be offered at the appearance before the court, by which pleading is considered the presentation of legal arguments of the case on the basis of a prepared, written memorandum.
5.5 At the appearance before the court will, possibly according to a provisional judgment of the case, be examined what the next step will be in the procedure. Furthermore, during the appearance the possibility of a settlement (possibly concerning only certain parts) can be discussed. The hearing will end with a few formalities.
6. THE DECISION
- on the incidental claim of lack of jurisdiction
6.1 Rejects the claim; and
6.2 Orders [Seller] to pay for the costs of the incidental claim, including the costs of [Buyer] which are estimated to be EUR 452.00;
- in the main action
6.3 Orders the appearance of the parties, accompanied by their lawyers, for the supplying of information and to attempt to reach an amicable settlement at the hearing of G.V.M. Veldhoen in the courthouse in Utrecht at the Vrouwe Justitiaplein 1 on Wednesday 27 May 2009 from 13:30 to 15:30;
6.4 Orders that the parties be represented by someone who is knowledgeable of the case at hand and who is competent by law or on the basis of a special written mandate to represent the party;
6.5 Orders that a party not able to appear on the mentioned date should request, within two weeks after the date of this verdict written and motivated to the court care of the Secretary (Madam H. Albert's room A.2.16) - for an other day and hour while presenting dates on which parties are unable to appear in the three months following the mentioned date.
This verdict is pronounced by Mr. P.W.M. de Wolf and is publicly announced on 21 January 2009.
* All translations should be verified by cross-checking against the original text.
** Thomas van Hövell is currently in the final stage of his Masters in Corporate Law at the University of Utrecht.Go to Case Table of Contents