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Title: Control of Standard Business Terms: A Comparison between the Systematic Approach of §§ 305 ff. BGB and Art. 496-498 of the Chinese Civil Code

Control of Standard Business Terms: A Comparison between the Systematic Approach of §§ 305 ff. BGB and Art. 496-498 of the Chinese Civil Code

by Shuai Huang (Author)
©2023 Thesis 158 Pages
Law, Economics & Management
Series: Europäische Hochschulschriften Recht, Volume 6729

Summary

This book offers a comparison between Chinese and German regulations on control of standard business terms with the background of the new Chinese Civil Code. It shows the similarities and differences between the German and Chinese regulations and relevant judicial practices over control of standard business terms. This book also discusses how to interpret the Chinese content control rules and how to differentiate B2B and B2C contracts in control of standard business terms based on the legal comparison.

Table Of Contents

  • Cover
  • Title
  • Copyright
  • About the author
  • About the book
  • This eBook can be cited
  • Preface
  • Contents
  • Introduction
  • 1 Background
  • 2 The Comparative Legal Study and the Questions to Answer
  • 3 The Relevant Terminologies and Translations of Regulations
  • Chapter 1: A Comparison Between German Law and Chinese Law on Control of Standard Business Terms
  • 1 The General Logic Behind Control of Standard Business Terms
  • 2 The Definition of Standard Business Term: § 305 I BGB and Art. 496 I CCC
  • 2.1 Multiple-Use or Reuse
  • 2.1.1 Multiple-Use Criterion in § 305 I BGB
  • 2.1.1.1 The Appearance and Presumption of Multiple-Use
  • 2.1.2 Reuse in Art. 496 I CCC
  • 2.1.2.1 The Intention of Reuse
  • 2.1.2.2 The Appearance of Contractual Terms
  • 2.2 Pre-Formulation
  • 2.2.1 The Unilateral Pre-Formulation in § 305 I BGB
  • 2.2.1.1 Contractual Terms in Need of Supplements
  • 2.2.1.2 Contractual Terms with Multiple Options
  • 2.2.2 The Pre-Formulation in Art. 496 I CCC
  • 2.3 Negotiation (Aushandeln)
  • 2.3.1 Negotiation in § 305 I BGB
  • 2.3.1.1 The Negotiation in the Interpretation of the BGH
  • 2.3.1.2 Change of Content as a Regular Result of Negotiation
  • 2.3.1.3 The Micro Perspective Through the Word “soweit”
  • 2.3.1.4 Material Negotiations Instead of Formal Discussions
  • 2.3.1.5 The Burden of Persuasion and Proof
  • 2.3.1.6 The Same Rules Regulating B2C Contracts and B2B Contracts
  • 2.3.2 Negotiation in Art. 496 I CCC
  • 2.3.2.1 The Looser Tendency in the Determination of Negotiations of B2B Contracts and its Lack of Legal Certainty
  • 2.3.2.2 The Introduction of Factors in the Background of Transactions
  • 2.4 Summary
  • 3 Incorporation Control: § 305 II BGB and Art. 496 II CCC
  • 3.1 Incorporation Control in § 305 II BGB
  • 3.1.1 The Explicit Reminder
  • 3.1.1.1 A Standard Contract: The Most Common but Simplest Case
  • 3.1.1.2 A Clear, Concrete and Not-to-Be-Neglected Reminder
  • 3.1.2 The Opportunity in an Acceptable Manner to Take Note of the Content
  • 3.1.2.1 Readability and Comprehensibility
  • 3.1.3 The Declaration of Consent
  • 3.2 Incorporation Control in Art. 496 II CCC
  • 3.2.1 Incorporation Control Both for B2C Contracts and B2B Contracts
  • 3.2.2 Special Marks to Draw the Contractual Partner’s Attention
  • 3.2.3 Slight Differences in Incorporation Control Between B2B and B2C Contracts in Terms of the Explanations
  • 3.2.4 Jurisdiction Clauses: An Exception
  • 3.3 The Difference in Legal Consequences Between German Law and Chinese Law
  • 3.4 Summary
  • 4 Content Control: § 307 I, II BGB and Art. 497 CCC
  • 4.1 Content Control in § 307 I, II BGB
  • 4.1.1 Unreasonable Disadvantage
  • 4.1.1.1 The Principle of Equivalence
  • 4.1.1.2 The Possible Distinction Between B2C and B2B Transactions
  • 4.1.1.3 Summation Effect and Compensation Effect
  • 4.1.2 Deviation from Default Rules
  • 4.1.2.1 The Model Function of Default Rules
  • 4.1.2.2 Controversial Understandings of the Legal Rules in § 307 II Nr. 1 BGB
  • 4.1.3 Jeopardizing the Contractual Purpose
  • 4.1.3.1 The Role of § 307 II Nr. 2 in Relation to Nr. 1
  • 4.1.3.2 The Constituent Elements of § 307 II Nr. 2 BGB and the Relationship Between Them
  • 4.1.3.3 The Cardinal Obligations
  • 4.2 Content Control in Art. 497 CCC
  • 4.2.1 Three Legal Articles but Only One Usual Legal Basis
  • 4.2.2 Normative Positioning
  • 4.2.3 Judicial Arguments in the Relevant Practice
  • 4.3 Summary
  • 5 Other Regulations on the Control of Standard Business Terms
  • 5.1 §§ 305a-306a BGB and Art. 498 CCC
  • 5.2 §§ 307 ff. BGB
  • 5.2.1 The Transparency Requirement
  • 5.2.2 §§ 308, 309 BGB and the Interpretation of Art. 497 CCC
  • 5.2.3 The Roles of §§ 308, 309 BGB in the Future Legislative Revisions of the Chinese Civil Code
  • 5.3 Summary
  • 6 The Relationship Between Incorporation Control and Content Control
  • 6.1 The German Law
  • 6.1.1 Procedural Economic Reasons
  • 6.1.2 The Scope of Incorporation Control: A Broad Meaning
  • 6.2 The Chinese Law
  • 6.2.1 The Origin of the Link Between Incorporation Control and Content Control
  • 6.2.2 The Continuous Link Between Incorporation Control and Content Control
  • 6.3 Summary
  • Chapter 2: The Problem Shared by Germany and China: Differentiating Between B2C Contracts and B2B Contracts
  • 1 The Materials for the Analysis of this Problem
  • 2 The Reason for the Differentiation Between B2B and B2C Standard Business Terms
  • 2.1 Protection Needs
  • 2.2 Transaction Needs
  • 3 The Indicative Effects of §§ 308, 309 BGB
  • 4 Arguments for the Looser Control of B2B Standard Business Terms
  • 5 Proposals for Legislative Changes in German Literature
  • 5.1 Frankfurt Initiative
  • 5.2 Müller
  • 5.3 Berger
  • 5.4 Müller/Griebeler/Pfeil
  • 5.5 Lawyers’ Assembly
  • 5.6 Huth
  • 5.7 Stomps
  • 5.8 Axer
  • 5.9 Leuschner, Hannemann, Kieninger and Graf von Westphalen
  • 6 Summary and Evaluation
  • Chapter 3: The Unique Problem of the Chinese Civil Code and Its German Solution: The Typical Criteria of Content Control
  • 1 The Function and Positioning of Art. 497 CCC in Comparison With §§ 307 ff. BGB
  • 1.1 A Comparison Between Art. 497 CCC and §§ 307 ff. BGB
  • 1.2 The Comparison Between Art. 497 CCC and § 307 II BGB
  • 1.2.1 The Similarity and Connection Between Art. 497 CCC and § 307 II BGB
  • 1.2.2 The Difference and Connection Between Art. 497 CCC and § 307 II BGB
  • 1.2.3 The Differentiation Between Deviations from Default Rules and Jeopardizing the Purpose of Contract
  • 2 An Analysis of Art. 497 CCC
  • 2.1 Textual Deficits
  • 2.2 Problems in Practice
  • 3 Summary
  • Chapter 4: A Frame for the Differentiation Between the Control of B2C and B2B Standard Business Terms
  • 1 Economic and Political Considerations
  • 2 Factors to Be Considered for the Differentiation of Different Types of B2B Transactions
  • 2.1 Core Business
  • 2.2 Small and Medium-Sized Enterprises
  • 2.3 Economic Dependence
  • 2.4 A Contractual Value Limit for the Exemption From the Control?
  • 3 The Classification of B2B Transactions and Corresponding Approaches of Control
  • 3.1 The Classification of B2B Transactions
  • 3.2 Corresponding Approaches of Control Based on the Classification in Germany and China
  • 3.2.1 Germany
  • 3.2.1.1 Macro and Micro Determinations of Negotiations
  • 3.2.1.2 Indicative Effects of §§ 308, 309 BGB in B2C-Like transactions
  • 3.2.1.3 From Commercial Customs to Regularly Used Standard Business Terms
  • 3.2.2 China
  • 3.2.2.1 The Same Approaches to the Differentiation Between B2C, B2C-like and B2B Transactions
  • 3.2.2.2 Incorporation Control of B2B, B2C-like, and B2B Standard Business Terms
  • 4 Summary
  • Chapter 5: An Interpretation of Art. 497 CCC Based on the Experience of § 307 II BGB
  • 1 Status Quo of Studies on the Interpretation of Art. 497 CCC
  • 2 Judicial Practice of Art. 497 CCC
  • 3 The Functions of Default Rules and of the Purpose of the Contract in Chinese Civil Law
  • 3.1 The Function of Default Rules in Content Control
  • 3.2 The Function of the Purpose of the Contract in Content Control
  • 4 The Lessons from the Civil Law of Taiwan Area
  • 5 The Differentiation Between the Liability and the Main Right in Art. 497 CCC
  • 6 Elements of Interpretation
  • 6.1 The Semantic Element
  • 6.1.1 The Possible Meanings of “Liability”
  • 6.1.2 Possible Meanings of “Main Right”
  • 6.2 The Historical Element
  • 6.3 The Systematic Element
  • 7 Summary
  • Conclusion
  • References
  • Index

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Introduction

1  Background

In May 2020, the Chinese Civil Code (hereafter abbreviated as CCC where necessary) was passed by the National People’s Congress of China.1 It is the first civil code in the history of the People’s Republic of China. The CCC came into effect in January 2021. The contract part of the Chinese Civil Code comes from the Chinese Contract Law and is also profoundly influenced by the United Nations Convention on Contracts for the International Sale of Goods (CISG). However, unlike the other content within the contract part, the German Civil Code (Das Deutsche Bürgerliche Gesetzbuch, hereafter abbreviated as BGB where necessary) has rather influenced the regulations on control of standard business terms in the Chinese Civil Code. Evidence is that the Chinese Civil Code also has adopted the dichotomy of incorporation control and content control found in the German Civil Code. This influence is so substantial in the relevant Chinese academic studies that §§ 305 ff. BGB are an essential source of reference for Chinese literature in the discussion on those relevant Chinese regulations.

The control of standard business terms in the Chinese Civil Code is stipulated in Art. 496 and 497 CCC. Their predecessors, Art. 39 and Art. 40 of the Chinese Contract Law (hereafter abbreviated as CCL where necessary) took the Law Regulating the Standard Business Terms (Gesetz zur Regelung des Rechts der Allgemeinen Geschäftsbedingungen, hereafter abbreviated as AGBG where necessary) as an important object of reference in its drafting,2 but continuous revisions and simplifications in the process of drafting made it that Art. 39 and 40 CCL became considerably different from the regulations of the AGBG. Art. 39 and 40 CCL encountered problems later in practice. These problems included the unclear legal consequence of incorporation control in Art. 39 CCL and the vague criteria of content control in Art. 40 CCL.

Such challenges have prompted Chinese legal scholars to constantly call for amendments during the CCC’s legislative process.3 As a result, in the ←19 | 20→amendments adopted by the legislator of the CCC, the role of incorporation control under Art. 496 II CCC is clarified further: Art. 496 II CCC concerns incorporation control and prescribes the same legal consequence as § 305 II BGB. Consequently, the Chinese Civil Code and the German Civil Code became more similar on the issue of control of standard business terms. This illustrates the influence of the German Civil Code on the legislation of the Chinese Civil Code.

Although the Chinese legislator also made revisions to Art. 497 CCC, Art. 40 CCL and Art. 497 CCC still share the common legislative mode, the core conceptions of which are the “liability” and the “main right.” This legislative mode does not detail how to find the concrete content of the liability or the main right.4 The criteria of content control remain unclear because of this legislative mode. This legislative mode is very different from that in the German Civil Code. The German influence and the difference on the legislative mode raise the question of whether Art. 497 CCC could be interpreted based on the German Civil Code in order to clarify the criteria of content control in the Chinese Civil Code.

In addition to the interpretation of Art. 497 CCC, the bigger picture is how one can differentiate between B2B and B2C contracts in the control of standard business terms. This is the common problem shared by both the German Civil Code and Chinese Civil Code. As mentioned above, there are, to some degree, approaches to this differentiation in Chinese legal practice. However, these approaches are far from definite or stable, raising no fewer questions than those in German law. More importantly, these approaches have never been systematically discussed and summarized in Chinese literature. On the contrary, in Germany there are many discussions on this issue, but like for the Chinese case, still no commonly accepted answer. From this angle, China and Germany stand in a similar situation, and both require a solution to differentiate between B2B and B2C contracts in control of standard business terms in a reasonable way.

2  The Comparative Legal Study and the Questions to Answer

Despite the influence of the German Civil Code, Art. 496-498 CCC are not the same as §§ 305 ff. BGB. Compared with §§ 305 ff. BGB, there are indeed some equivalent rules in Art. 496-498 CCC, while some are similar, and others are simply different. What is more, there are also similarities and differences between the relevant German and Chinese judicial practices on control of standard ←20 | 21→business terms. The comparison between Chinese law and German law should also involve these judicial practices.

One specific issue in the above comparison is the differences between B2B standard business terms and B2C standard business terms. This issue is one of the most important problems faced by both Chinese law and German law. There are, to some degree, differentiated paths to control B2C and B2B standard business in the Chinese legal practice despite the fact that there is nearly no legislative differentiation between their control in the Chinese Civil Code.5 This is the opposite situation to German law. In Germany, the legislative differentiation between the B2C and B2B standard business terms remains blurred by the German legal practice.6

This solution could be a legislative solution or a solution of legal interpretation but it must be first be theoretically established. In other words, the justification of the differentiated control between B2B and B2C contracts should first be discussed. The starting point of this discussion could be a classification of B2B transactions into groups in need of different strictness of standard business terms control.7 This will also be one of the emphases of this dissertation.

Another issue is how to clarify the unclear criteria of content control in Art. 497 CCC by borrowing German criteria of content control. Because of the influence of German law to the Chinese regulations on this issue, it is meaningful to explore a new interpretation of Art. 497 CCC with reference to the German relevant regulations and judicial practice on content control. This issue involves both the understandings of German law and Chinese law on the content control rules.

With the consideration of the influence of German law to Chinese law on control of standard business terms, an understanding of §§ 305 ff. BGB is able to provide important insights into the interpretation of Art. 497 CCC. A comparison between the German Civil Code and the Chinese Civil Code can also help to solve the common problem faced by both of them, namely the differentiation between B2B and B2C contracts.

This dissertation will firstly undertake a comprehensive comparison of §§ 305 ff. BGB and Art. 496-498 CCC. On the basis of this comparison, two core issues will be further discussed the two core issues, namely, the differentiation between B2B and B2C standard business terms and the interpretation of Art. 497 ←21 | 22→CCC, the central regulation on content control of standard business terms in Chinese law.

This dissertation plans to answer the following questions:

Details

Pages
158
Year
2023
ISBN (PDF)
9783631898833
ISBN (ePUB)
9783631898840
ISBN (Softcover)
9783631897546
DOI
10.3726/b20740
Language
English
Publication date
2023 (February)
Published
Berlin, Bern, Bruxelles, New York, Oxford, Warszawa, Wien, 2023. 158 pp.

Biographical notes

Shuai Huang (Author)

Shuai Huang is a doctoral candidate of law under the supervision of Prof. Hinrich Julius at University of Hamburg with a scholarship from the China Scholarship Council. He passed the oral defense of his doctoral dissertation with the grade “magna cum laude” on 27.10.2022. The main field of his doctoral study is private law and comparative law. The other fields of his research include European and international law, law and economics, legal theory, and international relationships. Shuai Huang got a master’s degree in Chinese civil and commercial law from China’s University of Political Science and Law. He got another master’s degree in European and international law from University of Hamburg. He passed the National Judicial Examination of China in 2013.

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Title: Control of Standard Business Terms: A Comparison between the Systematic Approach of §§ 305 ff. BGB and Art. 496-498 of the Chinese Civil Code