INTRODUCTION
1. General
The following is a questionnaire designed to provide information on the general approach taken in the jurisdiction of Norway, in regard to "standard" Terms and Conditions of Sale and Purchase of Goods.
1.1 Definitions
In this Questionnaire the following terms have the meanings set out opposite them:-
"Standard Terms and Conditions" - means Standard or Common Terms and Conditions used by purchasers or sellers, or which purchasers and sellers try to use, in contracts for the sale of corporeal property (goods). The most commonly used term in Norwegian is "Leveringsvilkår".
"Goods" - means corporeal moveable property.
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2. Questionnaire
2.1 Are Standard Terms and Conditions generally used in contracts for sale and purchase of goods?
Standard Terms and Conditions are commonly used in Norway, especially among sellers.
Buyers also use such terms, most commonly where large professional buyers are concerned, both independently or through an association of buyers having negotiated standard terms with a seller or a group of sellers.
2.2 Do statutory provisions affect or restrict the terms which parties can have in contracts for the Sale and Purchase of Goods? If so, which are the principal statutes?
Norway has a set of provisions regulating the terms, which can have in contracts of this kind. The provisions may be divided into groups:
- A general provision allowing courts to sensor all kinds of agreement clauses to some extent
- Provisions in the Marketing Act regarding fair behavior between business entities
- Provisions protecting consumers
- Provisions with the aim to maintain free competition
2.3 Does the common law affect or restrict the terms which parties can have in contracts for the sale and purchase of goods? If so, what are the principal issues affected?
As common law as such is not a recognized principle in Norway, this legal term, as we interpret it, is more a set of interpretation guidelines to the courts in addition to the statutory provisions, and does not have much independent importance.
2.4 In the application of statute or common law to contracts of sale and purchase of Goods is a distinction made between consumer or commercial or international transactions?
In Norway we will respond - yes. There are several provisions giving consumers a further protection than commercial transactions between professionals.
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3. General Issues Affecting Contracts for the Purchase and Sale of Goods
What follows is a list of what might be seen as fundamental issues, which affect most contracts for the Purchase and Sale of Goods.
3.1 What are the remedies open to a purchaser or a seller if the other party to the contract does not fulfil its obligations in accordance with the terms of the contract?
The remedies open to a purchaser or a seller if the other party to a contract does not fulfil his obligations are several:
- Principally, present a claim for fulfillment
- Canceling the agreement on basis of a material breach of contract with immediate effect
- Sue for damages
- - Compensating loss of profit (being placed in the same economic position as if the contract had been fulfilled)
- - Compensation for actual costs incurred on the hand of the violated party
- Claim a price reduction
The remedies above may in principle be claimed in various forms of combinations, but it is quite normal in standard terms and conditions that liability to some extent is limited, especially when it comes to consequential damages.
3.2 Are there any time limits within which an innocent party must commence proceedings or make a claim in respect of breach of contract by a guilty party?
There is a general prescription period of three years from the time the innocent party became aware or ought reasonable to have become aware of the failure.
However, various provisions in some Acts of Parliament state a shorter prescription period. For example, the time limit for professional buyers to file a claim is two years after delivery of the goods in question. This also applies in consumer relations, unless the goods in question are meant to be used for a substantially longer period, giving the consumer a five-year period to file the claim.
These time limits do not apply where the seller has shown a material negligence or this will be violating a principle of "fairness and good faith".
3.3 Are there special formalities, which require to be observed in relation to the creation of a contract for Purchase and Sale of Goods?
In principle, there are no such particular formalities. However, in consumer relations, there are some statutory formalities to observe, especially when it comes to enforcing a claim for the sales amount or waivers of liability.
3.4 Are there any circumstances under which strict liability may be imposed on parties under a Contract for Purchase and Sale of Goods?
The answer in Norway is to some extent - yes. This applies for product liability and may also apply to a buyer's claim for compensation for delayed or defaulted delivery within certain limits.
3.5 Are there any restrictions on the extent to which either of the parties to a Contract for the Purchase and Sale of Goods can seek to exclude or limit their liability for failure to fulfil their obligations under that contract?
There are several ways for the parties to exclude or limit their liability, although the prevailing principle that contracts are binding, is the main rule.
According to our Agreement Act, the courts may censor contracts with a choice of either putting them totally aside, or limiting individual obligations under the contract.
Further, Norway also naturally recognizes the Force Majeure principle.
Further, there are as mentioned, restrictions as to including contract clauses limiting the liability versus consumers.
3.6 Does either statute or common law restrict the scope of the damages for which a guilty party may be liable and in particular is there any restriction on the extent to which a guilty party may be liable for consequential or indirect damages. If so, what restrictions?
It is a general principle that damages are only compensated where the damages were primarily a consequence of the act or omission in question, and where connection was reasonably foreseeable at the date of the act or omission. In professional relationships, consequential damages are most commonly excluded.
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4. Particular provisions which might appear in Standard Terms and Conditions
In Norway, sale and purchase of goods are regulated by our Sales Act of May 13, 1988 no. 27, which again is based on the Vienna Convention of April 11, 1980, regarding international sales of moveable goods. (UN Convention on Contracts for the International Sale of Goods)
This Act does apply in all matters unless otherwise is laid down in another binding law, and in principle not if otherwise is regulated in the agreement between the parties or follows by general trade practice or other custom that must be regarded as binding between the parties.
Accordingly, my comments hereinafter must be viewed in this respect.
4.1 Delivery - Terms Implied
Unless otherwise is agreed, the goods are to be delivered at the seller’s place of business. Delivery has taken place when the goods have been taken over by the buyer.
4.2 Where does delivery of Goods normally take place?
Normally the contract will specify the place of delivery and also the time of delivery. If a place of delivery is stated, delivery is regarded as having taken place upon the reception of the goods at the place of delivery.
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5. Price - What is included/excluded in Price. Can the price be varied?
5.1 Implied Terms
Unless otherwise agreed, the price is to be paid at the sellers place of business, and unless the price is specified, the purchaser shall pay the "going rate" at the agreement date for the same kind of goods sold under similar conditions, provided the price is reasonable. If a "going rate" cannot be established, the purchaser shall pay a price regarded as being reasonable.
5.2 Is it normal for specific provisions to be made regarding:-
a) VAT (Customs Duties and other taxes and duties)
Price quotations are normally given without VAT in professional relations. Normally this is specified, but will probably apply also when such specification is not given. In consumer relations, the opposite rule applies.
b) Packaging
Depending on what kind of goods, specific provisions regarding packaging are normally included.
c) Delivery and off-loading costs
Delivery and off-loading costs are normally specified and are normally implemented by using terms as fob, CIF, ex works or similar.
d) Insurance
It is quite common to include clauses regarding insurance, either directly or implemented in sales terms, see c) above.
5.3 Can a quoted price normally be changed at any time prior to acceptance?
A quoted price can normally be changed at any time prior to acceptance, provided that the change has been received or must be regarded as received by the accepting party before acceptance is given.
5.4 Can a quoted price be changed between acceptance of the order and delivery?
A quoted price can only be changed between acceptance of the order and delivery, provided a reservation for such alteration has been made. Such reservations are quite normal when it comes to changes in the exchange rates, changed in local taxes or customs, seasonal changes or similar.
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6. Is the time for payment of the essence of the contract? What are the seller's remedies for late payment and the purchaser's rights to make deductions from the price?
6.1 Implied Terms
Unless otherwise stated in the agreement, the purchaser shall pay when the seller demands payment, but only after delivery of the goods or the date the goods is at the buyer's disposal.
The seller may under the provisions of the act claim payment, cancellation and/or compensation.
If the goods are faulty, the purchaser can claim a price reduction corresponding to the difference in the value according to the contract and with the default at the time of delivery.
6.2 Normally:-
a) If payment is overdue, how is interest calculated?
Contracts normally specify overdue interest, which most commonly is between 18 and 25 % per annum.
If no agreement as to the overdue interest has been made, law directly regulates the seller’s claim to interest, and the rate is at the present 18 % per annum.
b) Must payment always be made in full without any deductions for e.g., a counterclaim or set-off?
There is general principle allowing a debtor to compensate counterclaims in the creditor's claim for the sales amount, unless a waiver to this extent has been passed.
c) Are discounts available for early payment?
Discounts may be available for early payment, but only subject to an agreement between the parties.
d) May a Seller who is concerned about the buyer's solvency attempt to secure payment by:-
i) taking a deposit or full payment up front,
ii) a retention of title clause
iii) a lien
It is a quite common contract term that any security for payment is given before delivery takes place either through
i) guarantee, letter of credit, prepayment
ii) security through retention of title clause/sales pledge in the stock of goods (although this is generally not regarded as good securities in professional relations)
iii) a lien when it is clear that the purchaser will not be able to fulfil his part of the obligations.
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7. Risk - When does risk pass?
7.1 Implied Terms
Risk passes generally upon delivery or having been placed at the purchaser’s disposal at the agreed place of delivery.
7.2 When is risk in the Goods normally transferred?
The Sales Act corresponds normally with contractual regulations regarding the transfer of risk. It is accordingly in practice more a question of specifying precisely the place of delivery.
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8. Force Majeure
8.1 Implied Terms
We have no direct implied terms using the term Force Majeure or similar. However, the principle is recognized through various regulations in the Act, limited a party's liability when his default is due to circumstances that the party could not prevent or reasonably foresee at the agreement date. This is supposed to correspond with the regular Force Majeure-principle.
8.2 Is a Force Majeure clause normally included?
Force Majeure clauses are most commonly implemented in standard terms of delivery.
8.3 If a Force Majeure clause is normally included does it wholly suspend the obligations of both parties during the operation of the event of Force Majeure or only some of those obligations, and if so which?
Quite often Force Majeure clauses are not very specific, thereby leaning on the Act as to a close interpretation of the contractual clause.
However, the parties' obligations are normally only suspended during the operation of the event of Force Majeure and only to those obligations being prevented by the Force Majeure situation.
It is quite commonly agreed that if the Force Majeure situation lasts for more than a specified period, the parties shall either renegotiate the agreement to divide the burdens reasonably between the parties, or agree upon a provision that gives the parties a right to cancel the whole agreement, if the Force Majeure event lasts for more than a specified period.
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9. Notices
9.1 Implied Terms
As mentioned above, notices shall be made within two years after delivery, at the latest.
Further, the purchaser shall examine the goods as soon as reasonable after delivery. If such examination has not taken place, the purchaser loses his right to the remedies laid down by the Act.
9.2 Are provisions on the service of notices normally included?
It is quite common to include provisions on the service of notices, especially to the time period, which normally is much shorter than two years.
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10. Severance Clause - a clause attempting to sever any illegal term from the remainder of the Conditions without affecting the validity of the remainder.
10.1 Implied Terms
We have no direct statutory law regarding this question. In such event, it is a general principle that such a clause does not affect the validity of the remainder of the conditions, unless such clause is of so material importance to the agreement that the agreement as such must be regarded as void.
10.2 Is such a severance clause normally included?
Such severance clauses are normally not included in internal agreements, but is quite common in international relations.
10.3 Is such a severance clause normally regarded as being enforceable regardless of the nature or extent of the illegal terms?
With the reservation of what I have said above in 10.1, such clauses are normally regarded as enforceable.
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11. Waiver clause - a clause providing that a breach of the contract on one occasion will not affect the rights of the innocent party if there is a further such breach or if the innocent party subsequently requires the guilty party to comply with the relevant contractual terms.
11.1 Implied Terms
Such clauses are not commonly used in our internal law system, as it is quite clear under Norwegian Law that the innocent party does not lose any rights under further breach-events.
11.2 Is such a clause normally included?
Such clauses are normally not included in internal contracts, see above under 11.1, but are now quite common in international relations.
11.3 Are there any restrictions on the enforceability of such a clause?
There are no restrictions as to the enforceability of such clauses, providing they do not contradict the general rule in our Agreement Act, as mentioned above.
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12. Jurisdiction clause - a clause specifying that the parties submit to the jurisdiction of a particular court or courts and specifying the proper law governing the contract.
12.1 Implied Terms
Unless otherwise agreed by the parties, the jurisdiction is regulated through Act of 03.04.1964, no. 1, regulating international private law questions relating to sale of moveable goods.
Unless otherwise agreed, the jurisdiction and law to be applied is the country where the seller had his place of business when he received the acceptance of the order. However, if the order was accepted by the seller being in the country of the purchaser, the latter's country's law shall prevail.
Such clause does not apply when it comes to collection clauses versus third parties.
12.2 Is such a clause normally included?
Such clauses are normally included in international relations.
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13. Arbitration clause - a clause submitting disputes to arbitration before a particular arbiter or before an arbiter appointed by a particular body.
13.1 Implied Terms
There are no implied terms as to arbitration, this being up to the parties to decide.
13.2 Is such a clause normally included and if so, what are its provisions?
Such clauses are quite often included, and this being the case, the clause specifies place of arbitration, the procedure as to choosing the arbitrators and quite often a reference to the procedural regulations laid by in our Procedural Act as to arbitration cases.
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14. Export or International Contracts
Under this heading I will refer to what is said above under each section.
The information contained in this brief is given in good faith, and is believed to be correct. However, no responsibility for errors or omissions shall be attached to this law firm and to Euro-American Lawyers Group. The information is provided for guidance only for use of member firms of Euro-American Lawyers Group and their clients, and shall not be relied upon in substitution for advice from the member firm in the relevant jurisdiction.
