B2B: Battle of the Forms in France

Recently, the Paris Court of Appeal stated that when a party imposes its general terms and conditions of purchase on the other party - which are not negotiated - this results in huge imbalance between the parties’ rights. As a law firm based in France working for several international businesses in the region, we thought it would be helpful to provide an overview of this case.

The case before the Paris Court of Appeal

The case before the Court arose from a commercial dispute between a supplier and a buyer.

The supplier argued that its general terms and conditions of sale constituted the sole basis for commercial negotiations - and therefore reflected the wills of the parties. The supplier concluded that its general terms and conditions of sale took precedence over the general terms and conditions of purchase of its customer, the buyer, which it denied having accepted.

The important distinction here is whether the terms and conditions at hand are general terms and conditions for sale or for purchase.

Battle of the Forms?

In this case, the supplier had acknowledged receipt of the buyer’s general terms and conditions of purchase which were attached to the Order Form by sending back its own general terms and conditions of sale in an attempt to rely on battle of the forms to indicate that the supplier did not approve the terms and conditions of purchase put forward by the buyer. The buyer did not retract the order, which went ahead.

In this case, there was a ‘battle of the forms’ scenario - the supplier and the buyer disagreed that the other party’s general terms and conditions applied, and the supplier attempted to invoke a legal principle whereby general terms and conditions of sale constitute the sole basis of commercial negotiation between the parties in order to try to argue that its document prevailed over the buyer’s general terms and conditions of purchase.

For UK and US parties, the issue before the Paris Court may seem somewhat strange. The battle of the forms principle relied on in several common law territories would seem to provide some level of certainty here (i.e., the last party to put down their terms, wins - in this case, the supplier). However, is is apparent from this recent Paris Court of Appeal decision that such practices cannot be safely relied upon in France.

The decision

The Paris Court of Appeal held that since Article L.441-6 of the Commercial Code requires all suppliers to provide their general terms and conditions of sale to their buyers, this must mean that general terms and conditions of sale are the sole basis for commercial negotiation, without such terms automatically taking precedence over general terms and conditions of purchase.

This means that the terms and conditions applicable to the sale are those agreed between the parties. Both general terms and conditions of sale and general terms and conditions of purchase must be accepted by the parties.

In short:

Whilst general terms and conditions of sale can be relied upon and appear to hold more weight than general terms and conditions of purchase, such terms should only be used for negotiation purposes only - where several sets of terms are put forwards between the parties in a battle of forms scenario, it will be important to ensure that a final decision is reached between the parties based on negotiation and consent - and that this can be evidenced to avoid being in a difficult position in the event a dispute arises.

As usual, if you would like to discuss your contracting practices or require advice on your general terms and conditions, do not hesitate to get in touch!

Article by Gabrielle O’Sullivan @ Gerrish Legal

Paris Court of Appeal Decision - 17 June 2021, No. 17/05445