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Correct use of general terms and conditions - International Law Office

International Law Office

Company & Commercial - Liechtenstein

Correct use of general terms and conditions

December 21 2009

Validity
Unusual Clauses


Validity

General terms and conditions are applicable only if the parties agree on them by contract, which may occur expressly or tacitly. In order effectively to conclude a contract based on general terms and conditions, it is crucial that the user of such general terms and conditions clearly indicates to the other party (ie, not in hidden or small print, ambiguous terms or on the back of a standard form) that it is willing to conclude the contract based on its general terms and conditions.

A contract may not validly be concluded based on general terms and conditions if these are included after the conclusion of a contract (eg, by applying a notation on the invoice or delivery note).

In terms of the validity of the contract, it makes no difference whether a party explicitly takes notice that the contracting partner wishes to conclude the contract based on its general terms and conditions. It is important only that the party had the opportunity to obtain knowledge of the general terms and conditions before concluding the contract. However, full knowledge of the subject matter of the general terms and conditions is not required for their valid inclusion.

In cases where each party wishes to conclude the contract based on its respective terms and conditions and such terms and conditions are contradictory, the contract will be validly concluded, excluding all such terms and conditions.

Unusual Clauses

Pursuant to Article 864a of the General Civil Code, general terms and conditions that contain unusual clauses do not apply where they may lead to a substantial discrepancy in contractual rights and duties, provided that the other party was not expecting such unusual clauses. General terms and conditions containing unusual clauses may be valid only if they are agreed upon individually (ie, the user of the general terms and conditions must expressly advise the other party thereof).

Moreover, pursuant to Article 879(3) of the code, general terms and conditions that do not define a bilateral consideration are null and void where they create a substantial discrepancy in the contractual rights and duties.

Finally, pursuant to Article 8(3) of the Consumer Protection Act, unclear and incomprehensible clauses in general terms and conditions are invalid.

The question of whether the subject matter of general terms and conditions is unusual should be judged objectively and the unusualness of such terms and conditions should be assessed in terms of the individual circumstances, as well as the ordinary custom of the type of business concerned.

Where a clause is compliant and usual according to the type of business concerned, even an inexperienced party may not argue that the clause was unexpected.

By contrast, a usual clause is invalid if - from the point of view of a bona fide user of general terms and conditions - it must clearly have been surprising to the other party, even given the actual context of the type of business.

Whether a clause is unfavourable to a party must be assessed from the point of view of a bona fide contracting partner.

If the contracting parties are both businesses, venue clauses in general terms and conditions are usual and should therefore not be surprising to an inexperienced party. However, venue clauses are invalid if the contractual document or the written offer refers only to the general terms and conditions of the business's premises.

Furthermore, the assignment of warranty claims in general terms and conditions is neither unusual nor unfavourable from an objective point of view.

For further information on this topic please contact Raphael Näscher at Ritter & Wohlwend by telephone (+423 236 55 33), fax (+423 236 56 11) or email (raphael.naescher@lawfirm.li).


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