Terms and Conditions
When you conclude contracts with customers – consumers or companies – as a business owner, it is helpful if the payment term, contract term or your liability, for example, do not have to be negotiated each time. To save time you can lay down matters of this kind in a set of general terms and conditions, which you then declare applicable to all your customers. Before they are valid the terms and conditions must be submitted to the customer for inspection prior to conclusion of the contract. They then apply automatically, even if the customer has not read them. Inevitably there are pitfalls with general terms and conditions: the submission for inspection must be in a prescribed manner; and a web shop is not allowed simply to put everything in its general terms and conditions, especially if it is doing business with consumers.
More than one contract
General terms and conditions are terms and conditions that have been drawn up for use in more than one contract, so they have been formulated in general terms. An example is the term “Exchange and return within eight days with receipt” on a sign at the checkout. This term will apply to all contracts that a retailer concludes with its customers. As general terms and conditions are basic in nature, they may not indicate the core of the performance (the essence of the contract), which for example is the price or the description of the product to be supplied. These things can never be included in general terms and conditions.
The useful thing about general terms and conditions is that they are applicable straightaway. There is no need for you to check whether the other party accepts them or has even read them. Even when the other party has not read them, your company’s general terms and conditions can apply to the contract. However, as a user of general terms and conditions you do have a duty of information, which means that you must offer the other party a reasonable opportunity to take note of your general terms and conditions. The law provides a number of ways to meet this obligation and it makes a difference in this regard whether you do business online or offline.
Online handover of terms and conditions
For electronic contracts, such as a purchase through a web shop or a quotation issued by email, the law provides for a special way of advising the other party of the general terms and conditions. In this context, the general terms and conditions must be made available electronically before or at the time of the conclusion of the contract, and in such a way that the customer can save them and read them later. You can meet this obligation in different ways. Below are some examples: • In the quotation that you issue digitally (by email) you can mention that your general terms and conditions apply to the contract, and append them as a PDF file attachment to the email. • In the online order process, you can place a link to a PDF file with general terms and conditions on the last page where final confirmation is requested. Draw the attention of the other party clearly to the fact that the general terms and conditions apply. A check box is recommended for this purpose. • You can insert a check box with the text ‘I agree to the general terms and conditions’ on the web page on which new customers can register. The customer should not be able to register without this agreement. • In the case of text message services, you can refer to the web address at which the general terms and conditions can be found in the text message and the advertisements for the service. We also recommend placing a link to the general terms and conditions on your home page, so that they are easy to find following conclusion of the contract. In this case, too, the other party must have the option to save the general terms and conditions, so it is best to place a link to a PDF file. If you fail to supply the other party with the general terms and conditions in a proper manner, they are voidable, which means that the other party can declare them invalid. This may mean that your invoices are paid later or that you become liable for things that you could have excluded.
Offline handover of terms and conditions
In the case of contracts concluded offline, you must hand your general terms and conditions to the customer before or at the time of the conclusion of the contract as a physical piece of paper. Remember that printing the general terms and conditions on the reverse of the invoice is too late, as the contract is already concluded at this point. So attach them to the quotation or the offer.
Unreasonably onerous terms and conditions
Since general terms and conditions are not negotiable, in principle, and many people do not even read them, a company may be tempted to include unreasonably one-sided provisions in its general terms and conditions. For the protection of the other party the law therefore offers the opportunity to declare individual unreasonable terms and conditions in the general terms and conditions invalid (annulment). Following annulment, such a term or condition may no longer be used. Whether a term or condition is “unreasonably onerous” is difficult to say in general; it all depends on the circumstances of the case. It makes a difference whether the other party is large or small, whether the term or condition is customary in the sector and sometimes even whether the customer itself also uses that term or condition for its own clients. The law however offers consumers, in contrast to large companies, some additional protection in the form of a grey and a black list. The black list contains terms and conditions that are always unreasonably onerous. An example is the rule that any and all complaints must be submitted within one week. The grey list contains terms and conditions that are mostly (“probably”) unreasonably onerous, such as a notice period of six months or an unconditional exclusion of all liability. The burden of proof for showing that the terms and conditions used are indeed reasonable then rests with the party that uses them. In principle, these lists do not apply to contracts between companies. You may therefore agree with a company that a complaint must be submitted within one week and that you can never be held liable for damage. However, sometimes even a business, especially if it is a self-employed person or an SME, can use these lists to argue that someone’s general terms and conditions are nonetheless unreasonably onerous for it. This is known as the “consequential effect”, which varies from case to case. The consequential effect in the case of an independent business owner facing a large multinational, for example, is greater than in the case of two large multinationals facing each other.
User and other party
In law the person who has drawn up the general terms and conditions – or had them drawn up – and uses them is called the user of the general terms and conditions, while the consumer – or the company – that then accepts the terms and conditions when it concludes a contract is called the other party.
The black list contains terms and conditions that are unreasonably onerous to consumers at all times. This is definitive. One notorious example of a “banned” general term or condition is the tacit renewal of subscriptions by more than one year. So if your general terms and conditions state that the subscription will be renewed by more than one year, this term in your terms and conditions is unreasonably onerous and therefore voidable. In fact this particular rule will become even stricter in 2012: then the renewal may not exceed three months, with a notice period of one month. Other terms and conditions that are by definition unreasonably onerous are the designation of a different court from the one that is competent under the law, and a term that gives you the right to raise the agreed price within three months of the conclusion of the contract without giving the other party the opportunity to terminate the contract.
The grey list contains terms and conditions that are usually regarded as unreasonably onerous. “Usually” because it is for the user of general terms and conditions to demonstrate that the term or condition is not unreasonably onerous. You must therefore present a good case to prevent the term or condition being nullified. An example of a term or condition appearing on the grey list is the use of a notice period of more than three months. This term is voidable, unless you can demonstrate that it is not unreasonably onerous. If, for example, you have a magazine that comes out on a quarterly basis, then a quarterly notice period is reasonable, but it will not be so in the case of a daily newspaper. The same goes for terms and conditions that offer the user the opportunity to alter the content of the contract without the other party being allowed to terminate it. Where unforeseen circumstances occur, however, such as an adjustment of the VAT rate, that may be reason to alter the contract without the other party being allowed to dissolve it. In such a case the term that the contract may simply be altered is reasonable.