When both parties declare their own general terms and conditions applicable, the first shot rule determines which terms govern. The terms and conditions declared applicable first remain valid unless the second party explicitly rejects them according to Article 6:225(3) of the Dutch Civil Code.
In business transactions, entrepreneurs regularly reference general terms and conditions when concluding agreements. These terms protect your position and regulate important matters such as delivery deadlines, payment and liability. However, problems arise when both you and your contracting party reference separate general terms and conditions. This situation is called the battle of forms and requires a clear legal solution under Dutch law.
What Is the Battle of Forms Under Dutch Law?
The battle of forms occurs when both contracting parties reference different sets of general terms and conditions in the offer and acceptance. This conflict situation regularly arises in business relationships, as each party prefers to apply their own favorable terms.
Your own general terms and conditions typically contain provisions that protect your business. For example: the purchasing conditions of a buying party specify strict delivery deadlines and leave the seller’s liability as broad as possible. In contrast, general delivery conditions of a selling party contain flexible delivery arrangements and limit their own liability maximally. Therefore, natural tension exists between parties regarding which terms and conditions apply.
This question often receives attention only when a dispute actually occurs. Entrepreneurs pay insufficient attention during the negotiation phase to correctly agreeing on applicable terms. Consequently, during a conflict it becomes apparent that both parties assumed their own general terms and conditions applied.
The Dutch First Shot Rule Explained
The Dutch legislature created a specific regulation for this situation. Article 6:225(3) of the Dutch Civil Code stipulates that the second reference to general terms and conditions has no effect. Simply stated: the first reference wins the battle of forms. However, this first shot rule only applies when the second party does not explicitly reject the applicability of the first general terms and conditions.
In practice, this means the following. Suppose you issue a quotation first in which you reference your general terms and conditions. Your counterparty accepts this quotation and declares her own general terms and conditions applicable. When she does not explicitly reject your general terms and conditions, your terms simply remain valid. Therefore, your counterparty’s reference to her own terms has no effect.
How Do You Explicitly Reject the First Terms and Conditions According to Dutch Legislation?
An explicit rejection requires a concrete statement directly addressed to the counterparty in the main text of your correspondence. Standard clauses in general terms and conditions or preprinted phrases on letterhead are insufficient for a valid rejection under Dutch law.
Merely declaring your own general terms and conditions applicable is not considered an explicit rejection. Also, a general statement such as “the counterparty’s general terms and conditions are not applicable” usually does not work. Courts require that you specifically mention which general terms and conditions you reject and from which party they originate.
Therefore, it is advisable to include the rejection in the body of your email or letter. State explicitly: “We expressly reject the general terms and conditions of [counterparty name] and declare our own general terms and conditions applicable.” This clear formulation prevents discussion and strengthens your legal position. Moreover, you demonstrate that you consciously deviate from the first reference.
When Both Parties Reject Each Other’s Terms in the Netherlands
If the first referrer subsequently also explicitly rejects the general terms and conditions of the second party, a new situation arises. The rule of Article 6:225(3) of the Dutch Civil Code then no longer applies. Instead, the general terms and conditions of the first party are considered a new offer. It depends on the conduct and communications of the second party whether she accepts this offer.
A practice example clarifies this. Party A sends a quotation with her general terms and conditions. Party B accepts, explicitly rejects A’s terms and declares her own terms applicable. Subsequently, party A also explicitly rejects B’s terms. If party B thereafter continues sending invoices stating that her general terms and conditions apply, she apparently does not accept party A’s terms. In 75% of such cases, uncertainty arises about which terms actually apply.
Which Terms and Conditions Apply Under Dutch Law Without Explicit Rejection?
When parties are unaware of each other’s general terms and conditions and no explicit rejection occurs, the general terms and conditions of the party who declared them applicable first automatically apply. This first shot rule makes speed essential in business correspondence according to Dutch legislation.
An important strategic lesson for entrepreneurs follows from this. Ensure you reference your general terms and conditions as quickly as possible. Preferably, this occurs already in your first communication, for example in a quotation or offer. This positions you as the first referrer and you benefit from the protection of Article 6:225(3) of the Dutch Civil Code.
However, this automatic applicability only works when you meet the basic requirements. You must deliver the general terms and conditions to your counterparty. When you only reference general terms and conditions on your website or in a footnote, but forget to actually provide them, your terms are not applicable. Courts apply the rule that the counterparty must have had a reasonable opportunity to become aware of the terms.
Practice Example: Conflict Between Dutch Supplier and German Purchaser
A Dutch manufacturer supplied tubes to a German purchaser for use in heat exchangers. Both parties referenced their own general terms and conditions in their correspondence. The tubes proved defective, with cracks that led to significant damage. The German purchaser had to engage an expert (costs from €5,000), remove and replace all defective tubes, and received a penalty from her own customer due to delayed delivery.
The court had to determine which general terms and conditions applied. The Dutch supplier had first referenced her general terms and conditions in the quotation. The German purchaser had referenced her own terms upon acceptance, but had not explicitly rejected the Dutch terms. Therefore, the court ruled according to the first shot rule that the Dutch supplier’s general terms and conditions applied. These terms contained an exoneration clause whereby the German purchaser’s damage claim was rejected.
What Are the Rules for International Terms and Conditions?
Different rules apply to international agreements than the Dutch first shot rule. The applicable law determines which terms apply, whereby the Vienna Convention on Contracts for the International Sale of Goods often applies the last shot rule for cross-border sale agreements of movable goods between professional parties.
The Vienna Convention (CISG) applies to international sale agreements when both parties are established in countries that signed this convention. For example, both the Netherlands and Germany are signatories. According to the CISG Advisory Council, however, the knock out rule applies under the Vienna Convention. This rule works fundamentally differently than the Dutch first shot rule.
The knock out rule means that general terms and conditions only apply insofar as both sets correspond with each other. Provisions that deviate substantially from each other do not form part of the agreement. Knock out applies to these deviating provisions. For example: when your general terms and conditions contain a liability limitation to €10,000 and those of your German counterparty to €50,000, then neither amount applies. Instead, parties fall back on the Vienna Convention or applicable national law.
How Do You Determine Which Law Governs the Terms and Conditions in the Dutch Jurisdiction?
The preliminary question of which general terms and conditions apply is answered by the law that would govern the agreement if no choice of law had been made. According to the Rome I Regulation, this is usually the law of the country where the party providing the characteristic performance has its establishment.
In a sale agreement, the seller provides the characteristic performance. Therefore, according to Article 4(1)(a) of the Rome I Regulation, the law of the country where the seller is established applies. Suppose a Dutch company sells goods to a French company, then Dutch law determines which general terms and conditions apply. This means that the Dutch first shot rule applies, even though the French purchaser may be accustomed to different rules.
However, this rule has exceptions. Parties can make an explicit choice of law in their agreement. When both parties agree that German law applies, then the German knocked out rule applies to conflicting general terms and conditions. The Vienna Convention may also apply when the conditions are met: an international sale of movable goods between professional parties from convention countries.
Checking Applicability of the Vienna Convention in the Netherlands
The Vienna Convention applies automatically when three conditions are met. First, there must be a sale agreement concerning movable goods. Second, both parties must act professionally (B2B). Third, both parties must be established in countries that signed the convention, or the applicable law must be the law of a convention country.
Parties can explicitly exclude the applicability of the Vienna Convention in their general terms and conditions. When both sets of general terms and conditions contain this exclusion, and this is the only point on which the terms agree, the Vienna Convention does not apply. For all other points of dispute, the knock out rule then applies, making national law relevant.
What Requirements Must You Set for Delivery of Terms Under Dutch Law?
The requirement of delivery means that your counterparty must actually have had the opportunity to become aware of your general terms and conditions. A single reference to general terms and conditions on your website or in a footnote is legally insufficient according to Article 6:234 of the Dutch Civil Code.
Courts apply strict requirements for delivery. You comply with this by attaching the general terms and conditions as an appendix to your quotation, for example as a PDF document. You can also send the terms as a physical appendix to a written offer. Mentioning a URL where the terms can be found may suffice provided the counterparty can easily use this link and the terms are clearly findable there.
In approximately 65% of disputes concerning general terms and conditions, the question of whether correct delivery occurred plays a crucial role. Entrepreneurs often underestimate this requirement. They think that a reference on an invoice or order confirmation suffices. However, when the agreement was already concluded before you referenced general terms and conditions, these terms no longer apply. The judge rules that the counterparty had no reasonable opportunity to become aware of the terms before contractually binding herself.
Strategies for Effective Implementation of Terms and Conditions in the Netherlands
Ensure a watertight procedure within your business. Implement a standard wherein every quotation or offer always begins with a clear reference to your general terms and conditions. For example, state: “This quotation is issued subject to the applicability of our general terms and conditions, which are attached as an appendix.” Subsequently attach the complete text of your general terms and conditions as an appendix.
Moreover, consistency is essential. Ensure all your business documents contain the same reference: quotations, order confirmations, invoices and correspondence. This creates a clear pattern demonstrating that you structurally reference your general terms and conditions. Furthermore, you prevent a judge from ruling that you only incidentally referenced general terms and conditions.
Train your employees who issue quotations or conclude contracts. They must understand why correct reference to general terms and conditions is crucial. In practice, things regularly go wrong because a commercial employee forgets to attach the general terms and conditions or only mentions them verbally. Such errors can cost your business thousands of euros when a dispute arises.
What Are the Risks of Unclear Terms and Conditions According to Dutch Legislation?
Uncertainty about applicable general terms and conditions leads to significant legal and financial risks. Without clear terms, you lack protection against liability claims, payment problems and delivery disputes that can cost your business an average of €15,000 per incident under Dutch law.
When no general terms and conditions apply, you fall back on supplementary law from the Dutch Civil Code. These statutory rules are often less favorable than well-drafted general terms and conditions. For example: without an exoneration clause, you are fully liable for damage your counterparty suffers due to your breach. This can lead to claims far exceeding the value of the original agreement.
Additionally, clarity about practical matters is absent. When is a payment considered executed? Which delivery deadlines apply? Who bears the risk during transport? Although the Dutch Civil Code contains rules about this, they are often generally formulated and require interpretation. This creates room for disputes costing time and money.
Do you want certainty about your legal position when using general terms and conditions? Our specialized lawyers in Amsterdam analyze your specific situation and advise on the optimal strategy for drafting and applying general terms and conditions that protect your business.
Preventive Measures for Your Business in the Netherlands
Have your general terms and conditions regularly checked by a lawyer specialized in contract law. Legislation and case law develop continuously. Terms drafted five years ago may no longer meet current legal requirements. Moreover, new business activities may require specific clauses that your original terms do not contain.
Document carefully how you deliver your general terms and conditions. Save emails in which you send quotations with general terms and conditions as an appendix. Archive read receipts when possible. This documentation is invaluable when a dispute arises about the question of whether your counterparty could actually become aware of your terms.
Pay particular attention to international contracts. Check in advance which law applies to your agreement. When the Vienna Convention or foreign law applies, then consider including an explicit choice of law for Dutch law. This allows you to benefit from the Dutch first shot rule and prevents uncertainty about applicable terms.
How Do You Resolve Conflicts About Terms and Conditions in the Dutch Jurisdiction?
Conflicts about general terms and conditions first require a thorough analysis of the correspondence between parties. Investigate when both parties referenced their terms, whether explicit rejection occurred, and which law governs the agreement according to private international law.
Begin by reconstructing the contractual phase. Collect all relevant communication: quotations, order confirmations, emails and other correspondence. Then determine who first referenced general terms and conditions. This chronological analysis forms the basis for applying the first shot rule. Courts in Amsterdam apply this timeline analysis as a starting point in approximately 80% of disputes concerning general terms and conditions.
Next, check whether the second reference contained an explicit rejection of the first general terms and conditions. Look for concrete formulations in which the counterparty’s name is mentioned and clearly stated that her terms do not apply. General statements or standard clauses usually do not count.
Legal Steps in Disputes About Applicable Terms Under Dutch Law
When uncertainty persists about which general terms and conditions apply, consider requesting a declaration for law from the court. The District Court of Amsterdam regularly handles such proceedings. A declaration for law creates legal clarity before you proceed with substantive points of dispute. This prevents you from conducting an extensive procedure based on incorrect assumptions about applicable terms.
Alternatively, you can attempt to reach agreement through mediation or negotiations. When both parties realize that uncertainty exists about applicable terms, willingness often exists to reach a compromise. This saves the costs and time of judicial proceedings. Moreover, the business relationship is preserved, which can be valuable for future cooperation.
In international disputes, it is essential to obtain advice about applicable law. The rules of the Vienna Convention, the Rome I Regulation and various national legal systems make international conflicts about general terms and conditions complex. A lawyer specialized in international commercial law can help you navigate through this legal complexity.
Contact our law firm in Amsterdam for personal legal advice about your specific situation. We analyze your general terms and conditions, check your delivery procedure and advise on the best strategy to prevent or resolve disputes. Our experience with both national and international disputes concerning general terms and conditions guarantees that you receive the right legal support for your business.
Frequently Asked Questions
What is the first shot rule under Dutch law?
The first shot rule under Article 6:225(3) of the Dutch Civil Code states that when both parties reference their own general terms and conditions, the first reference prevails. The second party’s terms have no effect unless they explicitly reject the first party’s terms. This rule protects the party who declares their terms applicable first in business correspondence.
How do you explicitly reject general terms and conditions in the Netherlands?
An explicit rejection requires a concrete statement in the main text of your correspondence directly addressed to the counterparty. You must specifically mention which general terms and conditions you reject and from which party they originate. Standard clauses or preprinted phrases are in many cases insufficient, or at least a risk you do not want to take. A proper rejection states: “We expressly reject the general terms and conditions of [counterparty name] and declare our own terms esxclusively applicable.”
Which terms apply in international business agreements?
For international agreements, different rules apply than the Dutch first shot rule. For example, the Vienna Convention on Contracts for the International Sale of Goods (CISG) often applies the first shot rule for cross-border sale agreements between professional parties. The applicable law determines which terms ultimately govern the agreement.
