A registered company (seller) from Hong Kong entered into a contract with an Austrian corporation (buyer) for the supply of Tantalum powder to be delivered in instalments over a period of two years. The contract was negotiated in English, but the purchase orders contained a provision referring to buyer's standard terms, printed in German on the reverse side. According to these terms, the contract was governed by Austrian law. Although the purchase orders should have been signed by the seller and returned to the buyer, the seller had sometimes delivered the goods without even signing and returning the orders. Later on, a dispute arose on whether or not the standard terms had been validly incorporated into the contract.
The Court found that although CISG (which was held to be the law governing the contract pursuant to its Art. 1(1)(a)) does not specifically address the matter of incorporation of standard terms, their inclusion into the contract is governed by the relevant provisions on contract formation (Art. 14 CISG et seq.) and interpretation (Art. 8 CISG et seq.) In accordance with Art. 8 CISG, standard terms must be included in the offer of the party relying on them as intended to govern the contract in a way that the other party knew or could not have been reasonably unaware of such intent. This might be done through express or implied reference to them, in the course of the negotiations or through an established practice between the parties as provided for by Art. 9(1) CISG. In the case at hand, it had been ascertained that seller had accepted the buyer’s practice to refer to its standard terms printed on the purchase orders' reverse side, since it never complained nor asked for a translation or proceeded to such a translation, notwithstanding the length, intensity and economic importance of the business relationship with the buyer. As a result, the incorporation of standard terms amounted to an established practice between the parties pursuant to Art. 9(1) CISG. Furthermore, the fact that the seller had sometimes delivered the goods even without signing and returning the received purchase orders was held by the Court as a tacit acknowledgment of the standard terms in accordance to Art. 8(3) CISG. |