Legal Basis for Issue 3

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Legal Basis for Issue 3 by Mind Map: Legal Basis for Issue 3


1.1. Article 9

1.1.1. (1) The parties are bound by any usage to which they have agreed and by any practices which they have established between themselves.

1.1.2. (2) The parties are considered, unless otherwise agreed, to have impliedly made applicable to their contract or its formation a usage of which the parties knew or ought to have known and which in international trade is widely known to, and regularly observed by, parties to contracts of the type involved in the particular trade concerned. The usage here is that since 2010 to 2018, Ms. Bupati (working for Southern Commodities then) and Mr. Chandra (working for Claimants) had concluded 40 contracts using the same standard terms with minor changes throughout these years. Ms. Bupati was well aware of these terms (October 2011, 2014 and in 2016 the revised standard terms were emailed to Southern Commodities)


2.1. Preamble

2.1.1. A reference by the parties to the Principles will normally be considered to be a mere agreement to incorporate them in the contract....the Principles will bind the parties only to the extent that they do not affect the rules of the applicable law from which the parties may not derogate the inclusion of the clause would not be governed by the CISG, but the non-harmonized substantive contract law which in relation to the conclusion of contracts and the inclusion of standard conditions for international transactions is a verbatim adoption of Article 2.1 of the UNIDROIT, Principles. (Pg. 7, P. 17 )

2.2. Art. 1.9

2.2.1. Parties are bound by their usages Art. 2.1.19 Implied incorporation may be admitted only if there exists a practice established between the parties or usage to that effect

2.2.2. Both courses of dealing and usages, once they are applicable in a given case, prevail over conflicting provisions contained in the Principles. The reason for this is that they bind the parties as implied terms of the contract as a whole or of single statements or other conduct on the part of one of the parties. As such, they are superseded by any express term stipulated by the parties but, in the same way as the latter, they prevail over the Principles

2.3. Art. 2.1.14

2.3.1. (1) If the parties intend to conclude a contract, the fact that they intentionally leave a term to be agreed upon in further negotiations or to be determined by one of the parties or by a third person does not prevent a contract from coming into existence. (2) The existence of the contract is not affected by the fact that subsequently (a) the parties reach no agreement on the term;

2.4. Art. 2.1.20

2.4.1. The risk of the adhering party being taken by surprise by the kind of terms so far discussed clearly no longer exists if in a given case the other party draws the adhering party’s attention to them and the adhering party accepts them. This Article therefore provides that a party may no longer rely on the “surprising” nature of a term in order to challenge its effectiveness, once it has expressly accepted the term.

2.5. Art. 2.1.15

2.5.1. Negotiations in bad faith (2) a party who negotiates or breaks off negotiations in bad faith is liable for the losses caused to the other party. (3) It is bad faith, in particular, for a party to enter into or continue negotiations when intending not to reach an agreement with the other party. The Respondents wanted to terminate the Contract because of the RED II directive which states that the production of palm-oil will start phasing out from 2023 onwards. The contract between the parties is from 2021-2025. Furthurmore, the Respondents were well aware of the Claimant's 2018 RSPO-Certification issue. Although 'Saving Lucy' was released in 2020 in Equatoriana, it was released in 2019 in Mediterraneo and until then singular actions by environmental activists against JAJA gained considerable traction. Parts of the general public in Equatoriana, which has traditionally been very environmentally conscious, started to participate in the actions against JAJA Biofuel. Pg. 19, Claimant Exhibit C-6


3.1. Last-shot Rule

3.2. Knock-Out Rule

3.2.1. Notwithstanding the general rules on offer and acceptance, that if the parties reach an agreement except on their standard terms, a contract is concluded on the basis of the agreed terms and of any standard terms which are common in substance A orders a machine from B indicating the type of machine, the price and terms of payment, and the date and place of delivery. A uses an order form with its “General Conditions for Purchase” printed on the reverse side. B accepts by sending an acknowledgement of order form on the reverse side of which appear its own “General Conditions for Sale”. When A subsequently seeks to withdraw from the deal it claims that no contract was ever concluded as there was no agreement as to which set of standard terms should apply. Since, however, the parties have agreed on the essential terms of the contract, a contract has been concluded on those terms and on any standard terms which are common in substance.


4.1. U.S. District Court, Maryland, United States, 8 February 2011

4.1.1. “a party which desires to contract only according to its own standard terms and conditions requires an unambiguous declaration of that intent.”

4.2. Oberlandesgericht Innsbruck, Austria, 1 February 2005; see also Landgericht Innsbruck, Austria, 9 July 2004

4.2.1. “[a]lthough [Buyer]’s counter-offer was not expressly accepted by the [Seller], it was nevertheless common that the [Seller] accepted the orders of the [Buyer] and delivered according thereto, even though [Seller] had not responded to them.” This led the court to state that this amounted to practices established between the parties, with the consequence that “the order of the [Buyer] was the basis for the contract and the standard terms had been effectively included.”

4.3. Netherlands Arbitration Institute, the Netherlands, 10 February 2005

4.3.1. A different tribunal stated that the fact that the buyer had on several occasions signed the faxed copy of the order confirmation containing standard contract forms established a practice between the buyer and the seller, a practice “the buyer has not deviated from . . . once nor has [the buyer] informed the seller after receipt of the general conditions that it did not wish the application of these conditions or wished to apply its own general conditions, if any.” This led the court to state that the seller’s standard contract terms had become part of the contract, since, “[b]y not informing the seller that it did not accept the general conditions, the buyer created in any case the expectation that it agreed to the application of the general conditions”

4.4. Oberlandesgericht Linz, Austria, 8 August 2005

4.4.1. practices established between the parties may impact the way standard contract terms become part of the contract.