General terms and conditions: validity
General terms and conditions (GTC, or AGB in German) are the clauses drawn up in advance by one party for an indeterminate series of contracts. Almost every company uses them: on the e-commerce site, on the back of invoices, in standard orders. The problem is that being printed does not mean being valid. In Switzerland the incorporation of GTC into the contract and their effectiveness follow precise rules, and ignoring them means discovering, at the wrong moment, that the clause you were counting on does not bind the other party.
How GTC become part of the contract
For the general terms to form part of the contract, the other party must have had knowledge of them and accepted them, at least globally. They need not have read them word for word, but they must have had an effective opportunity to view them before or at the time of conclusion. In practice:
- in e-commerce a clear reference to the GTC is needed and, ideally, an acceptance checkbox;
- a reference that appears only after the conclusion of the contract (for example on the invoice) generally does not make them binding;
- between businesses in the same sector, a reference to conditions in customary use can more easily suffice than towards a consumer.
Acceptance can be express or result from conduct, but the reference must be recognisable.
The unusualness rule
Even when the GTC have been globally accepted, Swiss law applies the unusualness rule (Ungewöhnlichkeitsregel): an unusual clause, which the weaker or less experienced party could not reasonably have expected, is not binding unless it was specifically flagged. Typically unusual are clauses that:
- alter the nature of the contract in a surprising way;
- strongly limit the rights of the other party;
- introduce unexpected forums or extensions of jurisdiction.
The more onerous and hidden in the text the clause is, the more it must be highlighted (bold type, separate notice) to be effective.
Interpretation against the drafter
Ambiguous clauses are interpreted against the party that drew up the GTC (the “in dubio contra stipulatorem” / Unklarheitsregel rule). Whoever writes the conditions bears the uncertainty: an obscure wording ends up favouring the other party. From this follows a practical rule: a few clear clauses are better than many vague ones.
Limits on content
Some clauses remain without effect even if correctly incorporated and not unusual:
- exclusions of liability for wilful intent or gross negligence are void;
- clauses excluding warranty in case of the seller’s wilful deceit are invalid;
- towards consumers, clauses that create a significant and unjustified imbalance between the parties’ rights and obligations are considered abusive and may be declared ineffective under the rules on unfair competition.
GTC, in short, do not allow the mandatory limits of contract law to be circumvented.
Conflict between different GTC
In dealings between businesses it happens that both parties invoke their own conditions (the classic “battle of the forms”). In these cases the coinciding clauses generally apply, while on the points where the conditions contradict each other, default law applies. Relying on the fact that “our GTC prevail because they were cited last” is risky: without an explicit agreement, precedence is far from guaranteed.
Language and accessibility
The GTC must be comprehensible to the other party. Providing them in a language the recipient does not master, or making them difficult to access, weakens the argument of acceptance. For a company active in Switzerland it is prudent to have versions in the languages of the markets served and to keep evidence of when and how they were made available.
How we work at SIH ONE
We draft general terms tailored to the channel (e-commerce, B2B, services) and incorporate them correctly into the contract-conclusion process, flagging onerous clauses and eliminating ambiguous wording. We also verify that the liability limits are valid and not merely printed.
Do you want GTC that genuinely bind your clients and hold up in the event of a dispute? Discover the services of our tax-legal division and bring order to your standard contract documents.