The Application of China's Content Control Rules Over Standard Business Terms in Business to Business Contracts

Text sample: Chapter 4.2 The Path of Application: 'Default rules' and 'the purpose of the contract' are only 'reference points' in the process of content control of standard business terms. The exact description of the content control criteria should be 'deviation from default rules' and 'jeopardizing the purpose of the contract'. The reason for 'deviation from default rules' rather than 'violation of default rules' is that it is usually neither possible nor necessary to ensure that a standard business term is identical in content to a default rule. The key to content control is to ensure that the content balance in standard business terms is acceptable. The balance of interests in a default rule is set by the legislation. When applying the default rule to the content control, it is only necessary to ensure that the balance of the standard business term does not 'deviate' too much from this 'reference point'. As to how much deviation is excessive and unacceptable, it is still necessary to leave enough space for judicial value judgment based on the distinction between consumer contracts, civil contracts and business contracts. At the same time, it is only when the purpose of the contract is compromised that it is necessary to deny the validity of the standard business term. As a point of reference, the purpose of a contract is far more ambiguous than a default rule. Therefore, it is particularly important to clearly explain the scope and meaning of 'jeopardizing the purpose of the contract'and, on this basis, clearly distinguish this standard of review from 'deviation from default rules'. 4.2.1 The 'Jeopardizing the Purpose of the Contact'Criterion Centered on the Major Performance Obligation: The core issue of the 'jeopardizing the purpose of the contract' criterion is how to define the purpose of the contract. With reference to § 307 II of the German Civil Code (BGB), the purpose of the contract in the context of the content control of standard business terms refers to the economic objectives and ideas that the parties to the terms intend to achieve through the contract, i.e. the 'reasonable expectations' of the parties in the contractual relationship. In essence, in a contractual relationship, the objective observer can expect the existence of certain indispensable elements, which constitute the content of the purpose of the contract. Based on the classic classification of contractual obligations, i.e., major performance, ancillary performance, and protection obligations, the core of the 'jeopardizing the purpose of the contract' criterion can be presented concretely and is thus directly applicable to the comparison with standard business terms. The most important contractual obligation is undoubtedly the major performance obligation, on the basis of which the contract is formed, and which gives rise to the contract . The 'jeopardizing the purpose of the contract' criterion can be further specified as an impairment of the major performance obligation. The major performance obligation, which is the core element of expectation of the contracting party facing standard business terms. The content of the major performance can be determined based on the individually negotiated terms in the contract and on the contract terms specially used to describe the major performance obligation. It is worth noting that in the review of the content of standard business terms, the scope of the 'major performance obligation' is smaller than it is usually perceived to be. The reason for this is that the content control of standard business terms cannot be conducted to the detriment of the basis of the existence of the contract. Rather, it can only be conducted within the existing context of the contract. Thus, the content control process cannot address the 'minimum agreement' that exists between the parties to the contract. Therefore, the content of this 'minimum agreement', which is the contract clause describing the main obligation to pay, is not the subject of content control. However. The determination of 'contract terms used to describe the main payment obligation' should be strictly limited, otherwise it can be very easily abused. The strict limitation here is that the contract terms used to describe the main payment obligation are strictly limited to those terms that directly describe the subject of performance, such as the direct description of product categories, service content and technical specifications. Other than that, the contract terms whose content is the contract performance mode, refund conditions, termination conditions, liability exemption and other obligations to change the main payment obligation, as well as those that set contract terms that are not based on an arbitrary specification of the time, place and manner of performance are not 'contract terms describing the major performance obligation', even if they meet the formal requirements of a standard business term. The limitation of the scope of 'contract terms used to describe the major performance obligation' shows us where the 'minimum consensus' that underlies the existence of a contract lies. Based on this 'minimum consensus', we can determine what the major performance obligation is in the contractual relationship. Since the major performance obligation is a materialization of the purpose of the contract, in principle, the determination of whether a standard business term impairs the purpose of the contract depends on whether the standard business term derogates from the major performance obligation of the party proposing the clause, i.e., whether the standard business term derogates from the proposer's obligation to pay for the performance of the subject matter. But there are exceptions to this principle. If a judge finds that none of the 'contractual provisions describing the major performance obligation' fully reflects the distribution of benefits between the parties in the ordinary course of such a contract, he or she may also add to the major performance obligation based on reasonable expectations. In such exceptional cases however, the judge is obliged to explain why the content of the supplement is a reasonable expectation of the contracting party facing standard business terms. For example, in a network service contract, because the service provider has data about the network service, the service recipient can usually expect that if the service provider claims that the service has been unilaterally suspended due to the recipient's breach of the standard business terms, the burden of proof should be on the service provider to make it possible for the service recipient to obtain relief. A standard business term that excludes such a burden of proof, while not excluding the obligation to pay for the subject matter of performance, violates a reasonable expectation and thereby impairs the purpose of the contract.