Simultaneous applicability of two sets of general terms and conditions
General terms and conditions: everyone knows them, most companies use them, and they regularly bear the risks of disputes. This was also the case in which the Dutch Supreme Court ruled on 24 April 2015, where two sets of general terms and conditions were declared to apply to an agreement and the question was raised of whether the consequence was that neither set applied.
A seller of animal feed raw materials entered into a purchase agreement with a purchaser for biological maize. The purchase was laid down in a pro forma contract printed on the seller’s stationery. It was stated in the text of the agreement that the “C.N.G.D.” conditions applied to the sale. At the foot of the pro forma contract was a preprinted text containing information about the seller, including the notification that its general terms and conditions applied to all of its transactions.
The contents of these terms and conditions differed as far as the dispute settlement was concerned. The fact is that the C.N.G.D. conditions determined that disputes would be settled by means of arbitration, whereas in the seller’s general sale and payment terms, the Middelburg court had been designated as the instance to which disputes between the seller and the purchaser had to be submitted.
The purchaser was not satisfied with the quality of the sold biological maize and instituted proceedings before the Middelburg court, claiming the repayment of the purchase price and damages from the seller. The seller then put up the defence that the court was not competent to take cognizance of the purchaser’s claim, and that the dispute had to be settled by means of arbitration. The seller was proved right by the Court, the Court of Appeal and the Supreme Court.
Supreme Court ruling
The discussion focussed on the question of whether general terms and conditions applied, since reference had been made to two different sets of general terms and conditions in the pro forma contract. In an earlier ruling in which the same happened, the Supreme Court had ruled that neither set applied. In this situation, however, it was determined in the agreement that set A or set B applied, without determining how it could be established which of both sets actually applied.
According to the Court of Appeal and the Supreme Court, the present case is different. In this case, the seller declared both sets applicable to the agreement, and the purchaser accepted this. The fact that the two sets differed in content as far as the instance was concerned that would settle disputes, does not alter this. According to the Supreme Court, in such a case it will have to be established through explanations which of both sets prevails. The court is allowed to attach more weigh to the way in which the terms are mentioned or rather incorporated in the agreement. The Court of Appeal had attached importance to the fact that the reference to the C.N.G.D. terms was included in the part of the agreement that had to be completed for each transaction separately, whereas the reference to the general terms and conditions of the seller was preprinted.
The above court ruling makes it clear that two sets of general terms and conditions may apply cumulatively to an agreement, even though they contain conflicting provisions. It is good to know this in practice, because it follows herefrom that the provisions that do not conflict with each other will fully count in any case. If it is desirable, as the occasion arises, to declare two sets of general terms and conditions applicable to an agreement, it must be determined which of them prevails in case they have conflicting provisions.
Should the above give rise to any questions, please contact mr. W.L. (Willem) Stolk or mr. I. (Iris) Broere.