B2B Contracts Research Articles

Penalty Clauses in Commercial Contracts

This article analyses and compares the rules applying to contractual penalties in Austria, Germany, France, Italy and England, as well es under the UNIDROIT Principles on International Commercial Contracts, PICC and the Principles of European Contract Law, PECL. Also, the different approaches found in these legal systems are scrutinised with regards to their practical implications for contracting parties. More specifically, some civil law regimes unduly restrict the signalling function of contractual penalties. This is quite surprising in B2B contracts and while this aims at protecting a contracting party from promising a large penalty, it also restricts the use of one of the cheapest marketing instruments available to a contracting party.

ABC ANALYSIS IN REVERSE LOGISTICS IN THE COMMERCIAL ENTERPRISE

The reverse logistics related to unsold goods in B2B contracts is a current problem for both practitioners and scientists. This work addresses the problem of using ABC analysis in reverse logistics. The analyzes used weekly data from 2014 to 2017 regarding sales and returns of selected assortment groups. The conducted analyzes showed that the dual ABC categorization due to the volume of sales and returns allows the selection of key groups of assortments for a potential enterprise.

Access to and Porting of Data under Contract Law: Consumer Protection Rules and Market-Based Principles

The paper explores whether a party under a contract is obliged to grant the other party access to data it has collected in the course of the contract. The paper is based on an analysis of European and German law and provides the basic insights from law and economics of contract law. Whether a contracting party has a right to access and port data depends on whether the party is a consumer or a business user. Article 16(4) of Directive (EU) 2019/770 on certain aspects concerning contracts for the supply of digital content and services provides such a right for consumers. For B2B contracts,the paper pleads for a cautious approach based on majoritarian default rules.

Data As Counter-Performance in B2B Contracts

Data as contractual counter-performance is a topic mostly discussed in the context of consumer contracts. Do the same rationales also apply to the B2B context?

Series of successive B2B contracts: impact on contract length and rental rate

PurposeCompanies in the B2B service sector often sign a series of successive contracts instead of one long contract with their vendors. Economic researchers have shown how the lengths of stand-alone contracts are influenced by economic factors such as asset specificity and economic volatility, but have not researched into contracts that are part of a continuous series. The purpose of this study was to explore if being a part of a series of contracts influences the length of the focal contract and the rental rate.Design/methodology/approachThe authors use data collected from the oil drilling industry to empirically test their hypotheses. The data set consists of 2,621 contracts involving jack-up rig hiring in the Gulf of Mexico region.FindingsThe authors empirically show that the series duration affects both the length and rental rate of each constituent contract, even after considering all other plausible economic factors. Specifically, the duration of a series has a positive effect on the length and a negative effect on the rental rate of the constituent contract.Originality/valueAlthough contract length is as vital as the rent in B2B service transactions, it is rather unfortunate that marketing scholars have not researched much into this topic. The findings offer a new insight into the forces that shape the B2B service contracts and thus help the B2B managers make a better decision in service contracts.

Electronic Contracts and E-Mediation in EU Law: Time for the EU to Extend E-Mediation for the Benefit of SMEs in B2B Transactions?

The article focuses on mediation and e-mediation in electronic contracts with the aim to explore the possibilities of SMEs to use e-mediation for low value electronic contracts in B2B cross-border transactions. It first analyzes soft law instruments at the international level pointing out at the work of UNCITRAL, and the work of International Chamber of Commerce (ICC) ADR Center. It then presents the successful EU legislation on mediation in civil and commercial disputes (Directive 2008/52/EC) and e-mediation in consumer disputes (Directive 2013/11/EU on ADR for Consumer Disputes and Regulation (EU) 524/2013 on online dispute resolution for consumer disputes). The position taken in the article is that the ODR platform should be extended to SMEs in electronic contracts in B2B relations. Indeed, the recent Commission proposal of April 26, 2018 on an EU Regulation on providers of electronic intermediary services (platform operators), which will establish fair and transparent general contract terms, demonstrates the need for mediation in B2B contracts. This need is also reflected in the recent initiatives of UNCITRAL for mediation in e-commerce that will be discussed in October 2018. The article ends with arguments that since the EU has adopted the general legislative framework as early as 2008 and has established the ODR platform, the EU has to extend e-mediation as a cost-effective and expeditious method for dispute settlement of electronic contracts for the benefit of SMEs in order to achieve the Digital Single Market.

Choice of Law in b2b Contracts: the Law of the Jungle

Abstract Is the law of the jungle the guiding principle with respect to choice of law clauses in international contracts between businesses (b2b contract)? Does a choice of law imply the rule of the strongest party? These and other questions are discussed in the light of 18 exploratory qualitative interviews with Dutch senior practising lawyers (advocaten). Lawyers were interviewed, since it is often presumed that they play an important role with respect to a choice of law in the pre-contractual phase. However, the perception of lawyers with respect to a choice of law is underresearched. The interview findings are discussed and compared to the data concerning a choice of law in the context of the debates about a common European contract law, regulatory competition, self-enforcing contracts and the legal origin theory. Finally, questions for future research are formulated. For instance, in the empirical research conducted sofar, no specific attention has been paid to small and medium sized businesses. Had they been considered, the outcome could have been different. The same may be said with respect to the different business sectors and the countries where the companies are established.

Developing Internet Jurisdiction in B2B and B2C Contracts: Focusing on Iranian Legal System with Comparative Study of American, English and eu Laws

Abstract In the modern world, electronic communications play a significant role in areas of national and international law such as Internet jurisdiction. Private international law provides that the competent court is the court within which jurisdiction the contract is performed, so it is important to know the place of performance of the contract in the case of contracts for digital goods such as e-books or computer software delivered online. It is equally important in the case of electronic services such as e-teaching. Furthermore, as consumer protection in B2C contracts is important in developing global e-commerce, it is important to consider whether the consumer party is able to bring an action against the business party in his own place of domicile or habitual residence. The article analyses these questions and proposes ways in which the Iranian legal system might be developed to address issues of Internet jurisdiction in B2B and B2C contracts.

No Market for ‘Lemons’: On the Reasons for a Judicial Unfairness Test for B2B Contracts

Abstract: Judicial intervention into B2B contracts should be construed as part of state infrastructure to improve business efficiency and thereby that of the market itself. The main purpose of unfair contract terms regulation should be to discharge a business from reading, analysing, or even negotiating the bulk of contract terms presented to them by other businesses. This enables businesses to prepare standard terms in advance, particularly those underlying high-volume transactions. Their customers can rest assured that such contracts would need to pass a judicial fairness test before being enforced and can therefore accept the bulk of all terms presented to them in blissful ignorance of the terms' content. However, those terms which an efficient market economy would expect businesses to read carefully and, if necessary, negotiate need not be subjected to this judicial unfairness test. Such terms exempted from the fairness test are, if transparent, those that determine the price and the main subject matter of the contract, those that any aggrieved business had actually itself supplied, and moreover, all terms in a contract of such a high value for which reasonable parties would seek legal advice and painstakingly negotiate every word. There is also no need for a judicial fairness test for those terms that have, in fact, been negotiated in detail by the parties, since the main function of the test is to compensate for the lack of negotiations. In order to free the parties in the most efficient way possible from negotiating, or even reading, all other terms, the following judicially applied unfairness test should apply. The further removed a particular non-negotiated term is from what reasonable and honest parties would have agreed in individual negotiations, the more likely it is that the individual term is unfair.

According to Custom ...? The Role of ‘Trade Usage’ in the Proposed Common European Sales Law (CESL)

Article 67 of the proposed Common European Sales Law (CESL) stipulates that usage and practices are binding on traders. It follows that, if such customs can be referred to in the interpretation of contracts, they create flexibility in the understanding of contractual agreements and therefore introduce a factor of uncertainty in commercial dealings. One may wonder whether a flexible rule like this is appropriate for the context in which CESL is meant to operate – B2B contracts in which at least one of the parties is a small or medium-sized enterprise (SME). A particular concern for the European market, in which many businesses are SMEs, is that local usage is likely to be unknown or even unknowable to one or both of the parties. The appeal of the CESL as an alternative contract regime therefore may be diminished. This paper addresses the question whether the CESL’s reference to trade usage in contract interpretation is indeed a weakness. A comparison is made with US literature in which two theories – the plain meaning rule and the incorporation theory – support different views on the role of usage in trade contracts. Applied to two existing uniform regimes for commercial contracts, the Uniform Commercial Code (UCC) and the Vienna Convention on Contracts for the International Sale of Goods (CISG), these theories reveal the strengths and shortcomings of the application of usage in specific market contexts. Distilling a number of parameters from earlier studies on these instruments, a comparison is made to test whether the CESL can safely make use of trade usage as a means of contract interpretation. It will be argued that the particular context in which the CESL operates – ie cross-border contracts involving SMEs – implies that the role of usage should be clarified in order to guarantee legal certainty. Such clarification can either mean that usage is only referred to in a very limited sense (eg only international usage widely observed in the particular area of trade in which the parties operate and which could be known to both parties to the contract), or that other means are created by which parties can become aware of trade usage in a particular market or area (eg databases of guidelines or trade practices).

According to Custom...? The Role of 'Trade Usage' in the Proposed Common European Sales Law (CESL)

Article 67 of the proposed Common European Sales Law (CESL) stipulates that usage and practices are binding on traders. It follows that, if such customs can be referred to in the interpretation of contracts, they create flexibility in the understanding of contractual agreements and therefore introduce a factor of uncertainty in commercial dealings. One may wonder whether a flexible rule like this is appropriate for the context in which CESL is meant to operate – B2B contracts in which at least one of the parties is a small or medium-sized enterprise (SME). A particular concern for the European market, in which many businesses are SMEs, is that local usage is likely to be unknown or even unknowable to one or both of the parties. The appeal of the CESL as an alternative contract regime therefore may be diminished.This paper addresses the question whether the CESL’s reference to trade usage in contract interpretation is indeed a weakness. A comparison is made with US literature in which two theories – the plain meaning rule and the incorporation theory – support different views on the role of usage in trade contracts. Applied to two existing uniform regimes for commercial contracts, the Uniform Commercial Code (UCC) and the Vienna Convention on Contracts for the International Sale of Goods (CISG), these theories reveal the strengths and shortcomings of the application of usage in specific market contexts. Distilling a number of parameters from earlier studies on these instruments, a comparison is made to test whether the CESL can safely make use of trade usage as a means of contract interpretation.It will be argued that the particular context in which the CESL operates – i.e. cross-border contracts involving SMEs – implies that the role of usage should be clarified in order to guarantee legal certainty. Such clarification can either mean that usage is only referred to in a very limited sense (e.g. only international usage widely observed in the particular area of trade in which the parties operate and which could be known to both parties to the contract), or that other means are created by which parties can become aware of trade usage in a particular market or area (e.g. databases of guidelines or trade practices).

Engineering Security Agreements Against External Insider Threat

Companies are increasingly engaging in complex inter-organisational networks of business and trading partners, service and managed security providers to run their operations. Therefore, it is now common to outsource critical business processes and to completely move IT resources to the custody of third parties. Such extended enterprises create individuals who are neither completely insiders nor outsiders of a company, requiring new solutions to mitigate the security threat they cause. This paper improves the method introduced in Franqueira et al. (2012) for the analysis of such threat to support negotiation of security agreements in B2B contracts. The method, illustrated via a manufacturer-retailer example, has three main ingredients: modelling to scope the analysis and to identify external insider roles, access matrix to obtain need-to-know requirements, and reverse-engineering of security best practices to analyse both pose-threat and enforce-security perspectives of external insider roles. The paper also proposes future research directions to overcome challenges identified.

A Critical Investigation of the 'Proposal for a Regulation of the European Parliament and of the Council on a Common European Sales Law'

The paper examines the CESL proposal as an act constituting an optional CL regime with the objective to improve the establishment and the functioning of the internal market by facilitating the expansion of cross-border trade for business and cross-border purchase for consumers. The paper is carried out on legal research and different opinions and reports on the CESL from a range of sources. Thus, it highlights the advantages and disadvantages of the act and if such attempt is really worth it.The main characteristic of CESL proposal is its optional nature. CESL may not apply autonomously, but only if chosen by the contractual parties. CESL proposal does not replace the national CL in the MSs; however, it intends to be a second CL regime for each MS. Principally, contracts will be still governed by the applicable national law, unless the parties have explicitly agreed to use the CESL. Despite its aim, CESL does not fit to any of EU legal acts as foreseen by art. 288 of the TFEU. This paper consists of five chapters. The subject of the first chapter is a brief description of the CESL objectives and the crucial factors to this proposal. The second chapter analyses the legal nature of the CESL in accordance with the TFEU provisions. Differently from the EU legal acts, CESL does not aim the approximation of MSs laws. In the third chapter, there are given the differences between the choice of B2B contracts and B2C contracts. The fourth chapter gives a comparison between the CESL and the CISG, as well as between the CESL and other international acts regulating the field of CL.Consequently, the fifth chapter is focused on recognising the need or non-need for an optional regime of sales law within the EU. Although the positive characteristics of CESL, this chapter intends to find out the gaps related to the parties’ interest.The interpretation is mainly based on the proposal text and EU primary and secondary law. The conclusion summarizes the legal and economic concerns about CESL; it is a short review of positive effects proposed by CESL and the contradictions it may raise if entered in force.

Die Vertragsaufhebung im Vorschlag eines Gemeinsamen Europäischen Kaufrechts

Termination of contract in the CESL requires a fundamental non-performance of one of the parties. In the case of malperformance Art 114 Para 2 CESL provides for an exemption in B2C contracts, as the consumer also has a right to terminate, if the goods do not conform to the contract, unless the lack of conformity is insignificant. The article tries to offer ways to interpret the new terms: It argues that the case law developed for "fundamental breach" of Art 25, 49 CISG may serve as a source of interpretation for B2B contracts, whereas Art 3 Para 6 Directive 1999/44/EC ("minor lack of conformity") seems to be the proper point of reference for B2C contracts. The article further criticises that in B2C contracts the CESL do not adhere to the hierarchy of remedies. Priority of repair should also be a principle in the CESL and could easily be realised by granting the seller a right to cure the lack of conformity like in the B2B relationship.

An Optional Instrument on Contract Law and Social Dumping Revisited

Will an optional instrument on contract law result in social dumping? In this paper it is argued that this is likely to occur especially with respect to b2b contracts. This educated guess is made on the basis of empirical research concerning the Societas Europea and a choice of law in international contracts. This issue has been raised by the publication of the European Commission’s Green Paper on ‘policy options for progress towards a European Contract Law for consumer and businesses’, in which the European Commission initiates a consultation with respect to the future of European contract law.

Policy Options for Progress Towards a European Contract Law Comments on the issues raised in the Green Paper from the Commission of 1 July 2010

In its position paper on the Commission’s Green Paper on policy options for a European contract law (COM (2010) 348 final, 1 July 2010), the Max Planck Working Group welcomes initiatives to overcome the fragmentary and inconsistent state of contract law in Europe. However, the Working Group criticizes that the Commission did not sufficiently consider the issue of the legislative competence of the EU. At present, an optional instrument (opt-in) drafted as a Regulation (option 4) and based on Art. 352 TFEU seems to be the preferable option. Such an instrument raises a number of questions regarding its choice and its area of application which have been addressed by the Working Group. An optional instrument should be granted a broad scope of application, including both B2B and B2C contracts, domestic contracts, intra-Union cross-border contracts as well as contracts with parties resident in third states. Its scope should neither be limited to cross-border contracts nor to contracts concluded online. However, the recommendation of the Institute is subject to an evaluation of the substantive quality of the instrument which is not yet available. In this regard, an important preparatory work for any future European contract law, i.e. the Draft Common Frame of Reference (DCFR), has already been criticized by some members of the Working Group. Also, any legislative initiative should be preceded by a proper review of the existing acquis and should be coordinated with the current work on a Consumer Rights Directive.This article is published in this Research Paper Series with the permission of the rights owner, Mohr Siebeck. Full-text Rabel Journal articles are available via pay-per-view or subscription at IngentaConnect, a provider of digital journals on the Internet.

An Optional Instrument and Social dumping revisited

Will an optional instrument on contract law result in social dumping? In this paper it is argued that this is likely to occur especially with respect to b2b contracts. This educated guess is made on the basis of empirical research concerning the Societas Europea and a choice of law in international contracts. This issue has been raised by the publication of the European Commission's Green Paper on ‘policy options for progress towards a European Contract Law for consumer and businesses’, in which the European Commission initiates a consultation with respect to the future of European contract law.

Towards a Sharp Distinction between b2b and b2c? On Consumer, Commercial and General Contract Law after the Consumer Rights Directive

Abstract: The proposed directive fits very well with a sharp distinction between b2c and b2b contracts and comprises several features that – especially as a combination – provide an optimal basis for a future European consumer (contract) code. Still, nothing in the directive renders further distinction between b2c and b2b compulsory. This raises the question as to whether a rigid, categorical distinction between rules governing b2c and those governing b2b contracts is desirable. This paper argues that no substantive ground justifies such a categorical distinction. Non-consumers, especially small businesses, often encounter situations identical to those usually invoked to justify consumer protection. In such cases the equality principle would require that the legislator extend the protection prescribed for consumers to include this group. In this respect, greater transparency may be expected from the European Commission. How does the Commission view the future: does a European Code of Consumer Law lie ahead? The Council of the European Union and the European Parliament should ask the Commission for guidance here and should adopt a clear position themselves. This is important for two reasons. The first is that prior to transposition of this directive, Member States should know what to expect. The second is that if a European Code of Consumer Law ever materializes, it will need to be the outcome of a deliberate decision to this effect. Zusammenfassung: Der Richtlinienvorschlag passt sehr gut zu einer scharfen Abgrenzung zwischen b2c und b2b Verträgen. Darüber hinaus beinhaltet sie eine Anzahl wesentlicher Merkmale, die, insbesondere als Kombination, eine optimale Grundlage für ein zukünftiges Verbraucher(vertrags)gesetz darstellen. Allerdings enthält die Richtlinie keinerlei Bestimmungen, die zwingend eine Abgrenzung zwischen b2c und b2b Verträgen vorgeben. Hierdurch stellt sich die Frage, ob eine strenge, kategorische Abgrenzung zwischen den auf b2c und den auf b2b anwendbaren Bestimmungen überhaupt wünschenswert ist. In diesem Beitrag soll dargestellt werden, dass keine stichhaltige Gründe eine solche kategorische Abgrenzung rechtfertigen. Nicht-Verbraucher, insbesondere kleine Unternehmen, sind oft identischen Situationen ausgesetzt, die normalerweise zur Rechtfertigung der Verbraucherschutzes aufgeführt werden. In diesen Fällen würde der Gleichheitsgrundsatz den Gesetzgeber dazu verp. ichten, um den auf Verbraucher anwendbaren Schutz auch auf diese Gruppe auszuweiten. In diesem Zusammenhang wäre eine größere Transparenz von der Europäischen Kommission wünschenswert. Wie sieht die Europäische Kommission die Zukunft? Liegt ein Europäisches Verbrauchergesetz in der Zukunft? Der Rat und das Europäische Parlament sollten hierzu die Europäische Kommission um eine Anleitung fragen und ihrerseits eine klare Stellung beziehen. Das ist aus zwei Gründen sehr wichtig. Der erste Grund ist, dass vor der Umsetzung dieser Richtlinie, die Mitgliedstaaten wissen sollten, was sie erwartet. Der zweite Grund ist, dass im Falle der Einführung eines Europäischen Verbrauchergesetzes dieses das Resultat einer freien Entscheidung sein sollte.

SMEs in European Contract Law: Background Note for the European Parliament on the Position of Small and Medium-Sized Enterprises (SMEs) in a Future Common Frame of Reference (CFR) and in the Review of the Consumer Law Acquis

The aim of this paper is to identify what the position of SMEs should be in a draft Common Frame of Reference on EU contract law and in the review of the EU consumer acquis. In particular, this paper answers the following questions: How can the position of SMEs be defined in relation to the distinction between B2B and B2C contracts? Should consumer protection in the revised acquis and in the CFR be extended to SMEs? How can the European Union further facilitate cross-border transactions (B2B and B2C) by SMEs? Finally, it addresses the importance of normative coherence (treating like cases alike).