The Effect of Merger and Non-Reliance Clauses According to Art. 72 of the Commission’s Draft of the Common European Sales Law (CESL) – A Model for New Instruments for International or European (Consumer) Sales Law?

Abstract

The present chapter will critically examine Art 72 CESL on merger clauses. As a basis for this evaluation, a short comparison of the rules in England, Germany, the Netherlands, and the CISG on the validity and effects of merger clauses and, in the case of England, additionally non-reliance clauses will be provided. The chapter continues by examining the “stages of the text” which finally led to the CESL, before addressing scope of application, the interaction with other rules of the CESL and the final effect of Art 72 CESL. That will provide the basis for a separate evaluation of Art 72 CESL for B2C and B2B contracts. Finally, some concluding remarks and suggestions on how the Article should be changed will be given. Thereby, some guidance for the drafting of modern rules for business sales law, both, nationally and internationally is provided. It is also analyzed, in how far Art 72 CESL is suitable to form the basis for an optional instrument for consumer sales contracts in e- and m-commerce, as it seems to be suggested as part of the program on the digital agenda by the European Commission in the future.

Appendices

Annex: Rules on Merger Clauses in Modern (Drafts of) International Sales Law

CISG-AC Opinion no 3 The CISG has no provision on merger clauses. However, CISG-AC Opinion no 3, Parol Evidence Rule, Plain Meaning Rule, Contractual Merger Clause and the CISG, 23 October 2004 deals with this issue:

[…]

(3) A Merger Clause, also referred to as an Entire Agreement Clause, when in a contract governed by the CISG, derogates from norms of interpretation and evidence contained in the CISG. The effect may be to prevent a party from relying on evidence of statements or agreements not contained in the writing. Moreover, if the parties so intend, a Merger Clause may bar evidence of trade usages.

However, in determining the effect of such a Merger Clause, the parties’ statements and negotiations, as well as all other relevant circumstances shall be taken into account.

[…]

Art 2.1.17 UNIDROIT Principles 2010 (Merger Clauses)

A contract in writing which contains a clause indicating that the writing completely embodies the terms on which the parties have agreed cannot be contradicted or supplemented by evidence of prior statements or agreements. However, such statements or agreements may be used to interpret the writing.

Article 2:205(1) Principes Contractuels Communs 2008 (PCC)

Les parties ont la faculteʹ d’inseʹrer dans le contrat une clause d’inteʹgraliteʹ au terme de laquelle les deʹclarations ou engagements anteʹrieures que ne renferme pas l’eʹcrit n’entrent pas dans le contenu du contrat.

Art 2:105 (ex Art 5.106 A) PECL (Merger Clause)

• 1. If a written contract contains an individually negotiated clause stating that the writing embodies all the terms of the contract (a merger clause), any prior statements, undertakings or agreements which are not embodied in the writing do not form part of the contract.

• 2. If the merger clause is not individually negotiated it will only establish a presumption that the parties intended that their prior statements, undertakings or agreements were not to form part of the contract. This rule may not be excluded or restricted.

• 3. The parties’ prior statements may be used to interpret the contract. This rule may not be excluded or restricted except by an individually negotiated clause.

• 4. A party may by its statements or conduct be precluded from asserting a merger clause to the extent that the other party has reasonably relied on them.

Art II.–4:104 DCFR (Merger Clause)

• 1. If a contract document contains an individually negotiated term stating that the document embodies all the terms of the contract (a merger clause), any prior statements, undertakings or agreements which are not embodied in the document do not form part of the contract.

• 2. If the merger clause is not individually negotiated it establishes only a presumption that the parties intended that their prior statements, undertakings or agreements were not to form part of the contract. This rule may not be excluded or restricted.

• 3. The parties’ prior statements may be used to interpret the contract. This rule may not be excluded or restricted except by an individually negotiated term.

• 4. A party may by statements or conduct be precluded from asserting a merger clause to the extent that the other party has reasonably relied on such statements or conduct.

Art 68 FS/Art 72 CESL/Art 71 S-2-2012 (Merger Clauses)

• (1) Where a contract document contains a clause stating that the document embodies all the terms of the contract (a merger clause), any prior statements, undertakings or agreements which are not embodied in the document do not form part of the contract.

• (2) Unless the contract otherwise provides, a merger clause does not prevent the parties’ prior statements from being used to interpret the contract.

• (3) In a contract between a business and a consumer, the consumer is not bound by a merger clause.

• [(4) The parties may not, to the detriment of the consumer, exclude the application of this Article or derogate from or vary its effects.] Paragraph 4 is not included in the FS.

Also the EP has not suggested any changes to Art 72 CESL in its affirmation of this Article.