All entries for October 2011

October 26, 2011

The "Battle of the forms

Comparative approach of different laws shows that there are different approaches to resolve a conflict between general conditions of sale and general conditions of supply. One of this approach, chosen by English law, is the « Last shot rule ».

In Butler, Lord Denning wrote (1): nki0091l.jpg

where there is a battle of the forms, there is a contract as soon as the last of the forms is sent and received without taking objection to it. In some cases, the battle is won by the person who fires the last shot. He is the person who puts forward the latest term and conditions; and, if they are not objected to by the other party, he may be taken to have agreed with them.

The reference to combat terms, like « Battle », « Last shot » shows the importance of freedom of contract and of taking care about clauses contained in the agreements and terms and conditions send by the other party.

In France and Germany prevails an other rule : the Knockout Rule or the Restgültigkeitstheorie, which considers that terms and conditions of both parties are neutralized when they enter into conflict. They are considered as non-invokable and the general rules of law applied (2). This rule seems to be more objective and protect more the inattentive party. However, French administration and law which is not so strict fixed and organised as the german one sometimes differs from this rule, by trying to to impose general conditions of sales as the most important contractual document and asking judges to let it prevail - which can in my opinion appear quite injust for the buyer (3), or letting prevail the conditions which are the most visible (4).

This can be inimaginable and quite difficult to understand for english lawyers, which are strictly opposed to the idea to let the judges add terms into the contract or interpret it.

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NB : This knock-out rule was adopted UNIDROIT PICC (5) and by the American Uniform Commercial Code (6). There is a third approach followed by the Dutch civil code, the « first blow » rule, in which prevail the terms and conditions of the offeror, unless they are expressly rejected by the acceptor.

(1) Butler Machine Tool Co v Ex-cell-o-Corp [1979] 1 W.L.R. 401.

(2) For exemple, Ccass mars 1995, (pourvoi n°83-15936) in France and BGH, 20 mars 1985 (NJW 1985, 1838) in Germany, cited in Cases, Materials and Text on Contract Law, Ius Commune Casebooks for the Common Law of Europe, Second Edition, p 309 and p312 note (7).

(3) circulaire Dutreil du 16 mai 2003, Avis de la commission d'examen des pratiques commerciales n°04-04, 7 juil. 2004.

(4) Com. 20 oct. 1964, Bull civ. III, n°458

(5) article 2.1.22

(6) §2-207(3)


October 19, 2011

E.U consumer sale directive's implementation

What can I do in France, Germany and England when the microwav I've bought in a shop doesn't work - that is to say is non confrom under the E.U consumer sale directive (1)? what does that mean for business who want to sale goods cross-border?

After definiting non-conformity product and repeating the principle that the seller shall be liable to the consumer for any lack of conformity which exists at the time the goods were delivered, this directive proposes in its art 3. four options to the buyer: reparation free of charge or replacement free of charge (§3), and appropriate reduction made in the price or contract rescinded with regard to those goods -if the lack of conformity is not minor (§ 5 and 6). France, Germany, and England chose different implementation approaches: Whereas the directive caused radical changes in German BGB, beyond the initial area of the directive (the directive was extended to B2B contracts, which is not the case in France and England), the English parliament just created in addition to existing rules a new independent section in the Sale of Goods act 1979 concerning consumer protection which strictly follows the directive (2). The implementation of the directive in French law was more complicated : The french law contained supplementary protections when the defects were hidden, the « Garantie des vices cachés», according to the definition of art 1641 cciv (3). Finally, the supreme court (ccass) decided that the relevant actions have to be exercised before the other legal action (resulting from the directive) based on non-conformity. If these actions fail the buyer can exercise and action based on non-conformity following the dispositions of french code de la consommation (4).

bron1294l.jpg

These non-conformity actions still remain sometimes different in England, France and Germany:

  • The three laws allow the right of reparation or replacement of the product (art L211-9 code de la consommation ; §439 BGB ; 48B Sales of Goods Act). It's really a new right for the English customer. Before, in England «the buyer would have to get the goods repaired at his own expense and claim damages to cover the cost or reject the goods, buy substitute goods elsewhere and claim any additional cost by way of damages» (5).

  • But whereas the english law accorded reduction of the price or rescission of the contract without any condition (art 48C) - in addition to the old right to immediatly terminate the contract ; The German and french law allow a second possibility to the buyer only if neither repair nor replacement is possible or the seller fails to carry it out. The seller should NEVER forget it if he decide to stop its production or to restock. Theses possibilities are quite similar : right of price reduction or reimbursement of the price (art L211-10 code de la consommation) in france ; right of termination (§323), or instead of terminating the contract a price reduction (§441) in Germany.

NB : Moreover can always the buyer ask seller for damages for an independant damage caused by the defect (art 1382 code civil, 281 BGB) and exercise a contractual action based - if existing - on the guaranty accorded by the buyer in the agreement.

Interpretation : Different positions about consumer protection and harmonisation.

It appears so that English Law by a perfect implementation of the directive allows more protection to its consumer than French and German law, which can be surprising. Indeed, England is well-known to have difficulties to fit nicely its own Law with the European one, and to protect the principle of freedom of contract. Nevertheless England tried to keep its old rules, like the old right to immediatly terminate the contract.

France, known to protect sometimes too much the consumer, by trying to keep its own rules too like the "Garantie des vices cachés" now obliges to distinguish the worstsituations (hidden defect with a certain seriousness) which has the counter-effect, if we compare to new english law, to low the possibility to obtain reduction or recovering of the price.

Finally, German law which seems to gave the more importance to the directive, by using it to refund its law and extending it to the B2B contracts seems to be the less protective law in consumers area. But Germans seems to be -as always- the most opened to maximum harmonisation.

Sometimes Apparence can be deceptive...

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  1. Directive 1999/44/EC of the European Parliament and of the Council of 25 May 1999 on certain aspects of the sale of consumer goods and associated guarantee: http://eur-lex.europa.eu/LexUriServ/LexUriServ.do?uri=CELEX:31999L0044:en:HTML

  2. Sale of goods Act 1979 : http://www.legislation.gov.uk/ukpga/1979/54

  3. French code civil, art 1641-49. .Art 1644 Cciv explains that the buyer may choose between an "action rédhibitoire" (to return the thing and recover the price) and an "action estimatoire" (reduction of the price). These actions require 4 conditions : a defect of a “certain seriousness” without whom the buyer would not have bought the product, a hidden defect, impossible to detect at time the goods were delivered, a defect which existed at the time the goods were delivered, an action introduced in a “short delay” after the discovery of the defect (appreciated by the judges).

  4. French code de la consommation, art L211-4 / L211-14 : http://www.legifrance.gouv.fr/affichCode.do;jsessionid=288BACF09D1E578AF8FD77DACDC7D6F2.tpdjo15v_1?idSectionTA=LEGISCTA000006161839&cidTexte=LEGITEXT000006069565&dateTexte=20111019

  5. Cases, Materials and Text on Contract Law, Ius Commune Casebooks for the Common Law of Europe, second Edition, p. 1075, note (1).

  6. German BGB :http://www.gesetze-im-internet.de/bgb/index.html#BJNR001950896BJNE031602377



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