## Facts

- An Austrian manufacturer (buyer) ordered tantalum powder from a Hong Kong trader (seller) for use in producing tantalum wire products.
- The parties negotiated and documented their transactions in English.
- Each order referred to a sample and to the buyer’s standard terms printed on the reverse side of the order form in German, including a clause choosing Austrian law.
- After multiple orders, the buyer partly cancelled, citing decreased market demand, and alleged nonconforming deliveries compared with the sample.
- The seller disputed the buyer’s claims, and litigation proceeded in Austria under the CISG framework.

## Issues

1. Whether the CISG governs where the contract selects the law of a CISG Contracting State (Austrian law), even if CISG territorial application to Hong Kong is disputed.
2. Whether incorporation and effectiveness of the buyer’s German-language standard terms in an English-negotiated contract are governed by the CISG (not domestic law), and what conditions determine incorporation.

## Decision

- The Supreme Court held the CISG applicable by virtue of the parties’ choice of Austrian law, regardless of whether the CISG had been extended to Hong Kong.
- The Court held that incorporation of standard terms is governed by the CISG, particularly Articles 8 and 14, and must be assessed under a “reasonable possibility to understand” standard.
- The Court rejected a categorical rule that standard terms are ineffective solely because they are not in the language of negotiation or the contract.
- The Court reversed in part and remanded for further fact-finding on whether the seller had a reasonable opportunity, in the circumstances, to know and understand the German-language terms and thus be bound by them.

## Legal Principles

- A valid choice of the law of a CISG Contracting State generally entails application of the CISG as part of that law, absent an effective exclusion under CISG Article 6.
- Incorporation of standard terms is a CISG formation/interpretation question governed by CISG Articles 8 and 14.
- Standard terms are effective if the other party could recognize the proponent’s intent that the terms govern and had a reasonable possibility to understand their content.
- Foreign-language standard terms are not automatically ineffective; relevant circumstances include the terms’ length, the language’s accessibility in international trade, and whether translation would be reasonably expected.
- Under CISG Article 9, prior dealings and established practices between the parties may support incorporation of standard terms.
- In commercial settings, a party’s failure to object promptly to referenced standard terms may support an inference (under CISG Article 8) that the contract was concluded on those terms, depending on the circumstances.

## Conclusion

The Supreme Court held that the parties’ choice of Austrian law brought the CISG into play and that incorporation of German-language standard terms required a CISG-based, fact-specific inquiry into whether the seller had a reasonable opportunity to understand and accept those terms, warranting remand for additional findings.


Buyer v. Seller (CLOUT Case No. 534), 7 Ob 275/03x (Austria Sup. Ct. Dec. 17, 2003)