Reasons

This being a claim for damages for non-performance, the appropriate venue under paras 17, 29 ZPO, 270 para. 1 BGB, would normally be the court at K. The Landgericht at A, where the claim was brought, can therefore only be the correct venue if the parties have validly agreed on its competence. The plaintiff's general conditions of business do provide for such a venue, but . . . there will be no agreement to that effect unless those conditions are incorporated into the contract between the parties. The Landgericht held that they were not, and we agree.

I.

The rules relating to letters of confirmation do not apply when the recipient of an order 'confirms' his acceptance of it with variations of the contractual offer it contains (reference omitted). A proper commercial letter of confirmation reflects the content of a contract formed orally or by telephone or telegraph and is written in order to avoid misunderstandings, uncertainties or differences. Despite its description as 'confirmation of order', the plaintiff's letter of 6 January does not satisfy these requirements. It did not rehearse the terms of a contract resulting from prior negotiations; on the contrary, its function was to conclude a contract, none having yet been formed (on this see BGHZ 61, 285).

II.

The conduct of the defendant after receiving the plaintiff's letter of 6 January does not make for a contractual adoption of the plaintiff's general conditions of business. It is true that by reason of para. 24 no. 1 AGBG (Law on General Conditions of Business - Gesetz zur Regelung des Rechts der Allgemeinen Geschäftsbedingungen - AGBG) the constricting provisions of para. 2 do not apply in the present case, but it still remains necessary for general conditions of business to be incorporated in a contract between merchants. It is true that even as between merchants the validity of jurisdictional clause has been questioned on various grounds (references omitted), but we need not examine this view, which we would be unlikely to endorse, as there are other reasons for denying the efficacy of the plaintiff's general conditions of business in this case. By making its written order of 28 December 1976 refer to its general conditions of business and including a copy of them with it, the defendant made it unmistakably clear that it was not going to be forced into dealing on anyone else's terms. For one thing, it made any alteration in its terms ineffective without a specific written agreement; for another, it expressly adverted to the fact that the ordering of goods was an explicit acknowledgement of the exclusive applicability of its own conditions of delivery and payment, and of the inapplicability of any other terms. It is quite true that the defendant's conditions of delivery and payment were ill-adapted to the transaction in question: for example, they referred to the 'purchasing conditions of the buyer' as if it were the other party, when he himself was to be the buyer - but this does not affect the conclusion that the defendant gave unequivocal and unmistakable expression to its intention to bar any other general conditions of business. The plaintiff did likewise on 6 January in its confirmation of the plaintiff's order; it referred to its own general conditions of business, and sought to make them bind the defendant. The defendant did not respond to this demand of the plaintiff's that his general terms of business control the transaction, but this silence could not by itself in any way amount to an implicit declaration of acceptance, for silence rates as refusal rather than acceptance, given the inapplicability of the rules of commercial letters of confirmation (reference omitted). The only conduct of the defendant which could possibly be construed as a declaration of acceptance in the instant case is its acceptance of part of the goods in question. This court does not, however, view such acceptance of the goods as amounting to a declaration by the defendant that he was ready to submit to the plaintiff's general conditions of business.

1. When two sets of general conditions of business conflict, as they frequently do, the tendency is, so far as possible, to prevent the abortion of the contract. The courts originally started from para. 150 para. 2 BGB, whereby an acceptance in terms differing from those proposed, whether broader or narrower, was treated as a rejection, coupled with a fresh offer. The last contracting party to refer to his own conditions of business could therefore insist on them if the other party proceeded to perform the contract without dissent. Under this theory of the last word, as it was called, it all depended on which contracting party had made the last reference to his conditions (see, for example, BGHZ 18, 212). In practical terms, the result was that if you accepted goods without dissent, you were treated as accepting the other party's general conditions of business.

In its recent decisions the Bundesgerichtshof has restricted this approach, without casting much doubt, or light, on the underlying principle. It takes the view that the mere absence of dissent does not entitle the last person to refer to his conditions of business to assume automatically that the other party agrees to such alterations. This is to maintain the principle that among merchants silence is not tantamount to agreement (thus already in BGHZ 1, 355). On the contrary, there will normally be no agreement when the customer has made it clear that he is only going to take gods on his own general conditions of business and not on the supplier's terms (BGHZ 61, 282; further references omitted). All we learn from the decisions of the BGH is that when a purchaser accepts goods without dissent, one may in a particular case find that he has implicitly accepted the supplier's general conditions of business, reference to which makes it a new offer under para. 150 para. 2 BGB (NJW 1973, 2106). In BGB BB 1974, 1136, where the customer had included a qualified clause of refusal to deal on the other party's terms, it was accepted that it was for the supplier to get an unequivocal declaration in writing from the customer. While the Bulndesgterichtshof has not yet explained how to deal with an unqualified acceptance of goods when the parties' general conditions of business are in conflict (reference omitted), there is no mistaking its concern for legal security and clarity in commercial transactions. Thus in one recent case (WM 1977, 451, 452) where a person had modified the terms of the order in confirming it, he was held disentitled to treat the other party's acceptance without demur as an expression agreement with the contract as modified. This viewpoint alone 'meets the need for legal security and clarity in those typical cases where each negotiating party refers to his own contracting terms, and tries to make them part of the contract; often there is no discussion, let alone any agreement, whose terms are to apply, a matter on which their reciprocal rights frequently depend, should anything go wrong with performance. This should not unduly hamper commercial dealings. Modern communications are so good that even when time is short and the distance long, the parties can easily and quickly resolve the question whose terms of business are to apply. Anyone who fails to do this or starts performing before reaching agreement acts at his own peril'.

The Bundesgerichtshof went on to hold that the customer had not implicitly accepted the altered offer by accepting part of the goods. It agreed that when an order is modified on confirmation, this new offer (para. 150 para. 2 BGB) can be accepted implicitly, for example, by the acceptance of performance without demur, but said that this was the case only when in all circumstances it would be proper business practice to regard such conduct as clearly evincing consent. The Bundesgerichtshof further pointed out that paras 146, 147 BGB are applicable to a fresh offer under para. 150 para. 2 BGB, with the result that it can only be accepted within the period during which the offeror could normally expect a reply. If no goods are accepted within this period, then it is doubtful, to say the least, whether the subsequent acceptance of performance by the customer can be treated by the supplier as an implicit endorsement of his conditions of sale and payment, and, on the other side, whether the customer should have such meaning attributed to his action.

This decision of the Bundesgerichtshof may not lay down any precise tests, but at least, we think, it shows the right way to proceed. We must now pay much more attention to the way that businessmen actually do business. It is common experience that parties negotiating a contract are very reluctant to let the deal go off because of a conflict between the conditions of business (references omitted). This is why the conflict of terms is often deliberately left unresolved. It is only when problems arise in the course of performance that the parties resort to the point in order to reinforce their own legal position at that time. Then, for tactical purposes, the matter is treated as clear although up till that time it had intentionally been left unclear. Indeed, one of the reasons why parties include in their general terms a clause whereby they refuse, absolutely or conditionally, to deal on any other terms, is to provide ammunition in such cases. Thus when there is a conflict between general terms of business one should only find agreement on them when one party has unequivocally submitted himself to the other party's demand for the exclusive application of the latter's terms (reference omitted). It is for the person confirming the order 'to ensure, by making his position absolutely clear, that the alterations he is proposing in the terms become part of the contract' (BGHZ 61, 286). In our case an express clause stated that silence would be taken as agreement. Such a clause cannot, however, satisfy the requirement of clarity which is essential in legal transactions for the avoidance of disputes. That requirement would be flouted if acceptance of goods without protest were treated as a conclusive declaration of assent. It would therefore be quite wrong for a court to treat some subsequent conduct as an implicit declaration of intention simply in order to resolve the uncertainty about the validity of conflicting terms which had been left unresolved by the parties themselves. Thus some cases have held that the unconditional acceptance of goods did not constitute acceptance of a qualified 'our terms only' clause which the other party had introduced in confirming the offer (OLG Karlsruhe, BB 1973, 816; LG Hagen, BB 1976, 723; perhaps also OLG Frankfurt, BB 1975, 1606).

If silence in the face of an 'our terms only' clause does not amount to submission, then it must be immaterial whether the clause is more or less rigorously formulated. We see no reason to make the validity of contracts depend on the drafting skill of one party or his draftsman (references omitted): the form of such a clause cannot be crucial. Even the most drastic clause is typical of general conditions of business, just as typical as a less drastic clause, and it is their common typicality which is important, not the different degrees of rigour in their formulation. Were it otherwise, prophylactic draftsmanship would take the place of law.

Nor can it be relevant whether a specific objection has been made to the conditions of business proposed by the partner. To say that an objection to the application of the other party's conditions of business amounts to a new offer under para. 150 para. 2 BGB if it is made separately by letter, but not if one just refers to one's own conditions of business, would simply add a new twist to the old problem. The foreseeable response would be to make all future protests in an 'individualised form', just as appropriate clauses were drafted when the courts started treating the acceptance of goods without protest as an implicit declaration of consent (for example, 'Acceptance of the goods is not to be taken as consent to other terms', and so on). The real problem ought not to be masked by finding an implied declaration of consent, and the real problem is that the parties never reached any clear and unequivocal agreement, and generally - for fear of endangering the deal - never really meant to. But if the parties conduct themselves in this manner, why should we invest juristic constructions and make hair-splitting distinctions in order to absolve them from the legal consequences, especially if the result is to subject one of them entirely to the other's terms? In any case it does not square with the habits of tradesmen to treat the acceptance of goods as implicit submission to the other party's terms. Such behaviour really betokens an intention to ignore the conflict of terms, lest the contract be aborted, rather than any intention to accept the terms of the other party. Businessmen are more concerned with receiving goods and payment than with problems which may well not manifest themselves during the performance of the contract. The legal principle to apply in such a situation is as follows: a person who delivers goods before it has been determined which of the conflicting terms are to apply, waives his right to any such determination and cannot treat the acceptance of the goods as an indication of consent, i.e. of submission to his terms.

Flume has criticised the Bundesgerichtshof for not adopting a clear position and for not forthrightly abandoning the doctrine that the acceptance of goods may amount to a declaration of acceptance of an offer (Das Rechtsgeschäft (ed. 3, 1979, 675). We agree with him that it is time to stop making these difficult and confusing distinctions in individual cases and to start from the principle that if both parties refer to their own terms of business, the terms which conflict are invalid. Each contractor has it in his power to require the other to take a clear position. If he does not do so, usually for fear of losing the deal, then it is that. Flume's description of the economic and legal situation (at p. 676) is apt: 'The essential feature of cases where both contractors refer to their own general conditions of business is that the question whose conditions are to apply is not brought out into the open. Neither party is prepared to let the contract abort on this point. Neither insists that the other recognise the exclusive validity of his terms. Since the contracting parties have not resolved the question, one should not use para. 150 para. 2 BGB to deem agreement to have been reached when it has not. When both parties have referred to their terms of business, each can raise the question whose conditions are to apply when the contract is being concluded. If this question is not raised, and if neither manages to get the validity of his own terms of business accepted, the inconsistent terms are not incorporated.'

Finally, there is a certain element of inconsistency and shuffling, almost of bad faith, in a person who is now trying to profit from the confusion surrounding the terms of the contract which he could easily have resolved but consciously permitted to subsist.

The whole contract is not, of course, rendered invalid by failure to resolve the confusion and reach agreement on which terms are to apply: the parties do not intend that the contract should fail just because there is no agreement on that point (reference omitted). Those parts of the general terms which are not in conflict take precedence over dispositive law, which replaces only those clauses which are invalidated by the unresolved conflict (reference omitted). The same result would be achieved by analogical application of para. 6 para. 2 AGBG, which on this point contains a general principle of law (reference omitted).

2. In applying these principles to the case in hand, we conclude that the venue clause in the plaintiff's general terms of business, which is prejudicial to the defendant, is not binding on him. The defendant did not accept it. What happened was that there was an exchange of mutually conflicting stereotyped declaration with no further negotiations about them. In such a case one needs a clear written agreement by the defendant, and there is non here (reference omitted). This conclusion is all the more necessary because in this case the plaintiff had appreciated the defendant's unwillingness to trade on the plaintiff's terms, and had indeed raised the problem in his letter of 6 January 1977. In such a conflict it was not enough for the plaintiff to refer to h is own conditions of business and say that he would treat the defendant as accepting them if he did not protest: it was not in the plaintiff's power to bypass the rule that in commercial dealings silence counts as rejection. The subsequent negotiations about the price of the goods contain nothing approaching a declaration by the defendant that he submitted to the plaintiff's terms of business. On the contrary, the more or less intentional failure to go into the question despite the evident need for clarification shows that basically neither party wanted to put the formation of the contract at risk by insisting on an answer. Nothing could have been easier for the plaintiff than to state in one of its letters that the defendant had not yet accepted in writing the validity of his terms of business, but there is no sign of any such attempt at clarification in the plaintiff's correspondence.

As a subsidiary argument, the court notes that as the acceptance of the goods by the defendant took place after a substantial interval and not within the period within which the plaintiff was entitled to expect a reply from the defendant to his letter of 6 January under para. 147 para. 2 BGB, it could not have any positive value as a declaration of consent (reference omitted).

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