B2B Terms and Conditions

The seller has an interest in detailing the applicable order taking procedure. The terms and conditions must identify precisely when the contract enters into force. By default, a sales contract comes into force when the parties agree on the item and on the price, this agreement being most often materialized by the signing of a purchase order.

If the seller wishes to provide for retroactive or deferred entry into force, a clause to this effect must be included. Thus, if the order can only be validated after payment of a deposit, it should be expressly specified and to condition the entry into force to the payment of the deposit.

In most cases, the price appears on the purchase order or on a separate commercial document issued by the seller. If, between professionals, it is agreed that, in the absence of precision in this sense, the price indicated is a price excluding tax, it is essential to specify the elements included in the advertised price and the elements which will be invoiced in addition, in particular:

• Packing costs ;
• Handling and loading;
• Transportation ;
• Assurance ;
• Customs duties in the event of export sales.

It is preferable to integrate its payment conditions in the general conditions of sale AND on its invoices. If the customer pays without contesting several invoices without contesting the payment period, he will be deemed to have accepted the payment period even in the absence of precision in the general conditions.

Nevertheless, to avoid any ambiguity on this point (in particular for the first sale), it is advisable to stipulate the payment period also in the general conditions.

In the absence of a deadline expressly agreed between the parties, the additional deadline is thirty days from the date of issue of the invoice.

With regard to default interest, the auxiliary rate is equal to the interest rate applied by the European Central Bank to its most recent refinancing operation plus 10 percentage points.

Consequently, if the seller wishes to provide for a delay and/or late payment interest different from the delay and the rate applicable by default, he must clearly stipulate this in his general conditions of sale.

In the absence of a clause to this effect, the ownership of a property sold is transferred to its buyer as soon as the parties agree on the thing and on the price. Nevertheless, the seller may have an interest in deferring the transfer of ownership to the buyer.

Thus, if the seller has doubts about the solvency of the buyer, he can - in addition to setting up payment guarantees - stipulate a so-called retention of title clause. This clause provides that ownership of the property sold is only transferred to the buyer upon full payment. Thus, in the event of the opening of collective proceedings against a buyer who has not paid the full price, the seller may claim ownership of the property sold subject to retention of title and recover it.

In the absence of precision in this sense, the transfer of risks also occurs at the time of the agreement on the thing and on the price.

To provide for conditions for the transfer of risks derogating from the rule applicable by default, the general conditions must specify the moment at which the risks of deterioration are transferred to the buyer (for example: from the moment of delivery or handover to the carrier responsible for delivery).

In both international and domestic contracts, it may be appropriate to refer to an Incoterm. This is a standardized term that defines in particular:

• The responsibilities and obligations of a seller and a buyer, in particular with regard to loading, transport costs, type of transport, insurance and delivery;
• The place and time when the risks are transferred to the buyer.

For customer actions against carrier, customer must act within three days of delivery.

With regard to actions against the seller, the case law specifies that it is by taking possession of the goods that the buyer recognizes the execution of the obligation to deliver by the seller, without however setting a precise deadline.

This is the reason why, in order to limit the risk of complaints from its customers over time in the event of non-compliant delivery, it is in the interest of any professional seller to stipulate a product acceptance clause.

Ideally, this clause should:

• Make the buyer responsible for inspecting the products delivered upon delivery;
• Stipulate a period at the end of which the buyer can no longer make any reservations in respect of apparent defects of conformity, this period usually running from delivery;
• Provide that the receipt without reservation of the thing sold covers its apparent defects of conformity and that, since the defect of conformity invoked was detectable at the time of delivery and that the buyer has made no reservations within the contractual period, no return, exchange of products or compensation from the seller is possible.

In the absence of a precisely drafted acceptance clause, the seller exposes himself to belated complaints from his customers in respect of lack of conformity yet detectable on delivery.

Under the principle of full reparation, the seller is liable to the buyer for all types of damage that he is likely to cause him, without limitation of amount and regardless of the price of the contract.

Insofar as insurance contracts include exclusions and guarantee limits, it is vital for any company to limit its contractual liability to a minimum (i) to the types of damage covered by its insurance and (ii) to the guarantee limits. mentioned in the professional liability insurance contract.

Please note, however: the limiting clause which would deprive the essential obligation of the seller of its substance by exonerating it from all liability would be deemed unwritten and the seller would be liable without limitation. In other words, if the seller is responsible for nothing, he is responsible for everything.

Under these conditions, the limitation of liability clause should be precisely drafted so that it is applicable in the event of litigation. To do this, it is necessary to identify:

• The types of damage not compensated; And
• The total and cumulative amount of damages that could be due by the seller in the event of a breach of its obligations, this amount not having to be derisory.

Remember, however, that a judge will refuse to apply a limitation of liability clause, however lawful, when the seller has committed gross or fraudulent misconduct. This is a fault characterized by extremely serious negligence denoting the inability of the debtor of the obligation to accomplish his contractual mission.

A seller is not required to grant its professional customers guarantees other than the legal guarantees, applicable by default, namely:

• The guarantee of eviction which protects the purchaser of a good in the event of disorder in its possession on behalf of the salesman himself or because of a third party. In the event of the sale of movable property, the main disturbance of enjoyment that the buyer may suffer consists in the introduction, by a third party, of an action for infringement. The eviction guarantee can be reinforced or removed via a clause to this effect;
• The legal warranty against hidden defects which protects the buyer of a product affected by a hidden defect, existing on the date of purchase and which renders the product unusable. This guarantee can only be arranged between two professionals of the same specialty, this exception being strictly assessed by case law.

In the event that the seller wishes to grant a contractual guarantee, a clause to this effect must be included in the general conditions or in a separate contract. Particular attention should be paid to the drafting of this clause and the precise identification of:

• Defects covered and not covered by the warranty;
• The starting point of the warranty period;
• The length of the warranty period;
• The formalism to be respected by the buyer to benefit from the guarantee;
• Cases of warranty exclusion (for example, when the buyer has himself attempted to intervene on the product covered by the warranty).

The Civil Code, as recently amended, provides that each of the parties "may, at their own risk and peril, terminate the contract by notification" subject to having given formal notice to the other party "to fulfill its commitment in a reasonable time”.

Thus, the regime applicable by default does not specify:

• What breaches are likely to give rise to termination;
• What is meant by “reasonable time”.

In order to anticipate any discussion with its customers on this subject, the seller will have an interest in precisely identifying these elements in its general conditions.

In the event that the sale is concluded between two French companies and the product is delivered in France, French law will automatically apply.

In all other cases (in particular in the event of a sale concluded with a foreign company and/or delivery of the product abroad), it is essential to designate the applicable law.

Otherwise, the rules of private international law apply and they generate uncertainty insofar as the choice of a legal system by the judge requires a complete analysis of the factual context. To avoid any debate on this subject, the seller will have an interest in inserting in its general conditions a clause designating the applicable law.

The Vienna Convention on the International Sale of Goods may apply in the event of cross-border sale of goods, except in the presence of a clause expressly excluding the application of this convention.

Pursuant to the rules of civil procedure and in matters of the sale of goods, the Court of the place (i) of the domicile of the defendant or (ii) of delivery of the goods has jurisdiction.

However, in order to avoid any discussion on the territorial jurisdiction of the Court to be seized in the event of a dispute, it is in the seller's interest to stipulate a clause conferring jurisdiction, i.e. a clause identifying by name the competent court (for example, the Court of Commerce of Marseilles).

The main advantages of arbitration are the confidentiality and speed of the procedure, the major drawback being its cost. Under these conditions and unless the financial stakes and/or confidentiality requirements justify it (for example: arms supply contract), the presence of such a clause in the seller's general conditions may be likely to dissuade parties to initiate litigation.