The battle of forms under the Vienna Sales Convention (CISG) determines which general terms and conditions apply when both international trading partners refer to their own conditions. Unlike the Dutch first shot rule, the Convention applies the knock out rule: only substantively matching provisions become part of the contract.
International sale agreements between professional parties frequently fall under the Vienna Sales Convention. This treaty governs cross-border sales of movable goods between B2B parties established in contracting states. The question of which general terms and conditions apply when conflicting references exist is therefore governed by this international convention, not by Dutch domestic law. Article 6:225(3) of the Dutch Civil Code remains inapplicable in these circumstances.
What Does the Battle of Forms Mean Under Dutch Law?
The battle of forms arises when both contracting parties refer to their own general terms and conditions upon concluding an agreement, while these conditions differ substantively from each other.
In international trade, professional parties almost invariably maintain their own general terms and conditions. A Dutch exporter, for example, applies delivery conditions with limited liability, whereas a German purchaser prefers purchase conditions with extensive warranties. Both parties reference these conditions in quotations, order confirmations, and invoices. Consequently, uncertainty arises about which set of conditions governs the agreement.
The economic stakes are considerable. General purchase conditions typically contain strict delivery deadlines and broad liability provisions. Delivery conditions, conversely, offer flexibility in delivery and limit liability to direct damages. In disputes, the difference between both sets of conditions can determine whether a damage claim of €50,000 succeeds or fails entirely.
When Does the Vienna Sales Convention Apply to Your Agreement?
The Vienna Sales Convention applies to international sales contracts for movable goods between professional parties from contracting states, unless the parties have expressly excluded its application.
The Netherlands has ratified the Convention, along with over 90 other countries including Germany, France, China, and the United States. When a Dutch enterprise sells goods to a buyer in another contracting state, the Vienna Sales Convention applies automatically. Articles 14 and 18 of this Convention determine when an agreement is concluded and which conditions form part of it.
Parties can exclude the Convention by explicitly declaring Dutch or foreign law applicable. However, where both sets of general conditions contain an exclusion of the Vienna Sales Convention, the Convention indeed does not apply to the agreement itself, but does govern the question of which conditions apply in the first place.
How Does the Knock Out Rule Work in the Netherlands?
The knock out rule dictates that conflicting provisions in the general terms and conditions of both parties do not become part of the agreement, leaving only matching provisions in effect.
The CISG Advisory Council, an international expert group specialising in the Vienna Sales Convention, established the knock out rule as standard in Opinion No. 10. This approach deviates fundamentally from the Dutch first shot rule. Where Dutch courts allow the conditions of the first referencing party to prevail, the knock out rule eliminates conflicting provisions from both sets of conditions.
In practice, this means that when the seller limits liability to €10,000 and the buyer demands unlimited liability, neither provision applies. The Vienna Sales Convention then fills this gap with its own provisions on damages and liability. These Convention provisions typically offer sellers less protection than their own delivery conditions would provide.
What Are the Consequences of Conflicting Conditions Under Dutch Law?
With conflicting general conditions under the Vienna Sales Convention, enterprises fall back on Convention provisions or supplementary national law, potentially causing undesirable legal consequences.
A Dutch machinery manufacturer supplied heat exchanger tubes to a German buyer. Both parties referenced their own conditions containing different liability arrangements. The tubes proved defective, causing the German buyer substantial costs for investigation, replacement, and penalties towards his own customer. Due to the knock out rule, the liability limitations from neither party applied.
The dispute required assessment under the liability rules of the Vienna Sales Convention. These Convention provisions allow broader compensation possibilities than many standard delivery conditions. The seller could not invoke his exoneration clause, while the buyer equally could not benefit from his extended warranty provisions.
How Does the Knock Out Rule Differ from Dutch Domestic Law?
The Dutch first shot rule allows the first reference to general conditions to prevail, whereas the knock out rule eliminates both conflicting conditions and refers parties back to supplementary law.
Article 6:225(3) of the Dutch Civil Code stipulates that when offer and acceptance refer to different general conditions, the second reference has no effect. The conditions of the party that first referenced its own conditions apply fully. This system provides clarity: enterprises know that speed matters when declaring conditions applicable.
The knock out rule creates a different dynamic altogether. Neither party wins automatically. Provisions that substantively correspond, such as payment terms of 30 days or a forum selection for Dutch courts, remain effective. Conflicting provisions regarding liability, warranties, or delivery conditions disappear from the agreement. Enterprises thereby lose the protection their conditions intended to provide.
What Requirements Govern Incorporation of General Conditions in the Netherlands?
General terms and conditions become part of the agreement under the Vienna Sales Convention when parties consent to incorporation and the counterparty has had reasonable opportunity to take notice of the conditions.
Articles 8 and 9 of the Vienna Sales Convention determine how statements and conduct of parties must be interpreted. Tacit consent may suffice for incorporation. When a buyer places orders for years referencing delivery conditions without protest, the supplier may assume the conditions have been accepted.
The second requirement concerns accessibility. The counterparty must have had reasonable opportunity to take notice of the conditions. A reference to conditions on a website generally suffices, provided the counterparty was aware of this. Sending conditions by email or including them with quotations significantly strengthens the position of the user.
How Do You Determine Which Law Applies to Gaps Under Dutch Law?
For gaps resulting from the knock out rule, Article 4(1) of the Rome I Regulation determines that the law of the country where the seller is established governs the agreement.
When the knock out rule eliminates provisions from the agreement and the Vienna Sales Convention offers no regulation, national law must fill the void. For sales contracts of movable goods, the law of the seller’s habitual residence applies. A Dutch exporter therefore benefits from Dutch law in disputes about matters not regulated in the agreement or the Convention.
This arrangement offers Dutch sellers an advantage. Dutch law, for instance, prescribes a limitation period of five years for claims under Article 3:307 of the Dutch Civil Code, while other legal systems maintain shorter or longer periods. Moreover, Dutch courts are generally competent when Dutch law applies and parties have not made a deviating forum selection.
What Strategies Limit Risks in International Trade Under Dutch Law?
Enterprises limit risks in international trade by explicitly agreeing on one set of conditions, expressly rejecting the counterparty’s conditions, and recording the choice of law in the main contract.
The battle of forms arises because parties pay insufficient attention to the applicability of conditions during negotiations. Professional purchasers and sellers must actively discuss which conditions apply. An explicit provision in the main contract stating that exclusively the conditions of party A apply prevents disputes.
Express rejection of the counterparty’s conditions is essential. A standard clause in one’s own conditions does not suffice under the Vienna Sales Convention. The rejection must be directed specifically to the counterparty and preferably included in the main contract or accompanying correspondence. Explicitly state which conditions are being rejected.
Do you want certainty about the applicability of your general terms and conditions in international trade? Our specialised lawyers in Amsterdam analyse your contractual position and advise on risk limitation for cross-border agreements.
What Does the Last Shot Rule Mean in International Context?
The last shot rule, under which the last referenced conditions apply, is sometimes derived from the literal text of the Vienna Sales Convention but has been rejected by the CISG Advisory Council in favour of the knock out rule.
A strict reading of the Convention provisions on offer and acceptance suggests that the last reference to general conditions counts as acceptance with modifications. The counterparty who consents to this by performing thereby accepts the last mentioned conditions. This interpretation stands diametrically opposed to the Dutch first shot rule.
The practical objections against the last shot rule are substantial. Parties would endlessly continue referencing their own conditions to have the final word. Deliveries, invoices, and even payment reminders would become instruments in the battle for applicability. The knock out rule prevents this behaviour by rewarding neither party.
How Do You Protect Your Enterprise in Disputes Over Conditions Under Dutch Law?
Enterprises protect themselves by providing conditions timely, documenting references, recording rejections in writing, and seeking legal advice before disputes escalate when uncertainty exists.
Documentation forms the foundation of every strong position in a battle of forms. Preserve all correspondence referencing conditions. Record when conditions were sent and received. Use systems that automatically include conditions with quotations and order confirmations. Digital timestamps and read receipts strengthen your evidentiary position considerably.
When uncertainty exists about the applicability of conditions, preventive action proves wiser than litigation. The costs of legal proceedings over general conditions can amount to tens of thousands of euros in court fees and legal costs. An investment of several hours of legal advice prior to contract conclusion prevents these costs.
Contact our law firm in Amsterdam for personal legal advice about general terms and conditions in international commercial agreements. Our contract law specialists assess your conditions and advise on the optimal strategy for cross-border trade.
Frequently Asked Questions
What is the knock out rule under the Vienna Sales Convention?
The knock out rule determines that conflicting provisions in the general terms and conditions of both contracting parties do not become part of the agreement. Only substantively matching provisions remain effective. When provisions conflict, such as different liability limits, neither applies, and the Vienna Sales Convention or supplementary national law fills the gap instead.
How does the knock out rule differ from the Dutch first shot rule?
Under the Dutch first shot rule in Article 6:225(3) of the Dutch Civil Code, the general conditions of the party that first referenced its conditions prevail entirely. The knock out rule under the Vienna Sales Convention operates differently: neither party wins automatically. Instead, conflicting provisions from both sets of conditions are eliminated, leaving only matching terms in effect.
When does the Vienna Sales Convention apply to international sales contracts?
The Vienna Sales Convention applies automatically to international sales contracts for movable goods between professional parties established in contracting states. Over 90 countries have ratified the Convention, including the Netherlands, Germany, France, China, and the United States. Parties can exclude the Convention by explicitly declaring another law applicable in their agreement.
