Posts Tagged Standard terms and conditions
I have delayed reporting on judgment in Case C-322/14, Jaouad El Majdoub v CarsOnTheWeb.Deutschland GmbH, held 21 May 2015, for exam reasons. I reported earlier on the due diligence required of businesses when establishing choice of court through electronic means. The ECJ has now also had its say, in a case concerning a B2B contract for the purchase of a car. [Choice of court in a B2C context tends to be covered by the consumer contracts title hence is not at stake here. [Mark Young and Philipe Bradley-Schmieg review the relevance of the case for B2C contracts here].
Choice of court allegedly had been made in favour of the courts at Leuven, Belgium, in the vicinity of which the seller’s parent company has its head office. The buyer however sued in Germany, the domicile of the German daughter company (and of the buyer, a car dealer). Buyer claims that the contract at any rate was with the daughter company, not the mother company, and that choice of court had not been validly made. He submits that the webpage containing the general terms and conditions of sale of the defendant in the main proceedings does not open automatically upon registration and upon every individual sale. Instead, a box with the indication ‘click here to open the conditions of delivery and payment in a new window’ must be clicked on (known as ‘click wrapping’).
In essence therefore the question is whether the requirements of Article 23(2) of the Brussels I Regulation (now Article 25(2)) are met only if the window containing those general conditions opens automatically, and upon every sale. That Article was added at the adoption of the Brussels I Regulation, precisely to address the then newish trend of agreeing to choice of court (and indeed choice of law; but that is not covered by Brussels I) through electronic means.
The provisions on forum clauses in the 1968 Brussels Convention, Brussels I and the recast are drafted in a way ‘not to impede commercial practice, yet at the same time to cancel out the effects of clauses in contracts which might go unread’ (Report Jenard) or otherwise ‘unnoticed’ (the ECJ in the core case Colzani). the Report Jenard also notes that in order to ensure legal certainty, the formal requirements applicable to agreements conferring jurisdiction should be expressly prescribed, but that ‘excessive formality which is incompatible with commercial practice‘ should be avoided.
The first sentence of Article 25(1) discusses the parties ‘agreement’ as to choice of court. (It leaves a large array of national law issues untouched, such as consideration, mandate, 3rd party effect. etc. On some of those issues, see also Refcomp). The remainder of Article 25(1) concerns the possible formats in which agreement is testified. Article 25(2) (and 23(2) before it) accompanies Article 25(1) a’s option of having the agreement put down ‘in writing’.
In line with the requirement not to be excessively formalistic, the ECJ essentially requires that parties be duly diligent when agreeing to choice of court. If click-wrapping makes it possible to print and save the text of those terms and conditions before the conclusion of the contract, then it can be considered a communication by electronic means which provides a durable record of the agreement.
Note that the Court does not hold on whether the agreement is actually reached between the parties: only that click-wrap may provide a durable record of such agreement, where it exists. (One could imagine choice of court having been protested, for instance, or other issues of national law having an impact on the actual existence of the agreement. and one can certainly imagine a continuing discussion on what contract was concluded between what parties in the case at issue].
Choice of court and choice of law on the web – Due diligence required. Brussels Court of Appeal in A v P.
The Brussels Court of Appeal held in A v P on 25 March 2013, on a choice of court agreement included on the internet. Its judgment should be a reminder of the need to take care of the design and formulation of choice of court clauses in standard terms and conditions via the internet. The judgment can be consulted via this issue of Tijdschrift@IPR.be (p.37 ff).
The CA first of all correctly holds that the alleged non-existence of a contract does not affect its duty to review whether the choice of court agreement which is part of the contract, might be valid.
Company P has its registered seat in Poland. Company A in Belgium. P had sent A a quote for delivery of a substantial amount of solar panels. The judgment does not specify how the offer was sent however it was subsequently countersigned by A. Subsequent e-mails specified that the panels had to be delivered in Poland. The quote contained a reference to a weblink which contained P’s standard terms and conditions. No further written or verbal reference had been made by the parties to a choice of court agreement. P’s standard terms and conditions contained choice of court in favour of the courts at Brussels.
The Court of Appeal referred to Colzani in which the ECJ held that ‘IN THE CASE OF A CLAUSE CONFERRING JURISDICTION , WHICH IS INCLUDED AMONG THE GENERAL CONDITIONS OF SALE OF ONE OF THE PARTIES , PRINTED ON THE BACK OF THE CONTRACT , THE REQUIREMENT OF A WRITING UNDER THE FIRST PARAGRAPH OF ARTICLE 17 OF THE CONVENTION OF 27 SEPTEMBER 1968 IS ONLY FULFILLED IF THE CONTRACT SIGNED BY THE TWO PARTIES INCLUDES AN EXPRESS REFERENCE TO THOSE GENERAL CONDITIONS .‘ [apologies for the capital letters: this is how ECJ judgments used to be reported].
The Court of Appeal noted that the standard terms and conditions were not included in the quote: rather, only a reference to a website was made. The Court does entertain (but rejects) the possibility of the link being a ‘communication by electronic means’ within the meaning of article 23(2) of the jurisdiction Regulation.
I disagree with the guillotine application of Colzani’s reference to the inclusion of choice of court in the signed document. Surely Colzani can be applied mutatis mutandis to exclusively electronically available STCs. What’s more relevant in my view is the Convention’s (and now the Regulation’s) emphasis simply on making sure that parties have actually agreed to the clause: see Colzani at para 7: ‘BY MAKING SUCH VALIDITY SUBJECT TO THE EXISTENCE OF AN ‘ AGREEMENT ‘ BETWEEN THE PARTIES , ARTICLE 17 IMPOSES ON THE COURT BEFORE WHICH THE MATTER IS BROUGHT THE DUTY OF EXAMINING , FIRST , WHETHER THE CLAUSE CONFERRING JURISDICTION UPON IT WAS IN FACT THE SUBJECT OF A CONSENSUS BETWEEN THE PARTIES , WHICH MUST BE CLEARLY AND PRECISELY DEMONSTRATED .‘
A simple reference to standard terms and conditions in the paper contract signed by the parties, offers no more or less certainty that the party who agrees to the other’s conditions, has actually even read them (indeed as we all know, many never read the small print until it comes to litigation or complaint). What matters more, is that it can be reasonably assumed that they had at least the opportunity to do so. That is no less the case in the event of STCs included on the web.
However, in such case, the party whose STCs are included on the web, needs to ensure that the other party can be reasonably assumed to have consulted them, in the version applicable to the contract at issue. In my view this requires the STCs to be properly displayed on the website, and, in the event of changes in versions, for them to be numbered accordingly (and for that number or date to have been referred to in the undersigned quote, or contract, or electronic order). On this, I do agree with the Court of Appeal: the Court pointed out that the weblinked STCs had not been recorded in durable fashion (see Article 23 of the Jurisdiction Regulation).