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Which general conditions have priority?

31

January

2019

When running your business, you probably have general conditions which you use to conclude agreements with other parties (should this not be the case, it’s in your interest to request further information).

It’s not uncommon that your contracting party will want to use her own general conditions. This addresses an interesting issue, which general conditions do apply in the “battle of forms”?

Offer and acceptance

Offer and acceptance are needed to conclude an agreement. This principle applies as well as to applicable general conditions. Under Dutch law the “first shot rule” applies in accordance with Article 6:225 subsection 3 BW (Dutch Civil Code):

When offer and acceptance refer to different general conditions, then the second reference will have no effect when the applicability of the first reference of the general conditions has not been explicitly rejected.  

In other words, the general conditions of the party who has first ‒ in the offer ‒ referred to the applicability of the general conditions to the contract, is in principle part of the agreement should this offer be accepted.

Should the other party want to apply her own general conditions to the contract, then the applicability of the general conditions must be explicitly rejected first. This actually means that the offer is rejected in which a new offer is made. Should ‘’explicitly rejected’’ be omitted then the first reference still holds. For this reason, it’s called the “first shot”.

Exactly what under ‘’explicitly rejected’’ falls has been a subject for Dutch case law. From this it follows that a single rejection [disclaimer] in the standard text of your own general conditions (the non-application clause) is not sufficient. It should be concrete and clear, and not a standard text. It should entirely be clear to the contracting party that rejection is applicable here.  Should proceedings be brought into the ‘’battle of forms’’ matter, the court [judge] when considering whether the rejection is explicit enough, also examines the facts and circumstances of the particular case.  

Conclusion

It’s important for both contacting parties to remain alert:

• when you’re the party receiving the offer it’s important that you explicitly reject the general conditions. A standard text is not sufficient.

• when you are the party that made the offer, remain alert should the general conditions be rejected. In this case there is a new offer in which you will have to reject the general conditions of the contracting party. Otherwise, this can accidently lead to the situation in which the contracting party’s general conditions are applicable.

Should you have any questions regarding general conditions, please contact us. We will gladly help you.

Written by:
Bas van der Eijk
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