The use of a standard agreement in business transactions

Occurrence of standard agreement in business transactions is already a common practice. Companies in most contracts concluded with their contractors use the previously developed standard agreement. Pawel Dyrduł, lawyer from law office KG Legal Kiełtyka Gładkowski Sp.p with its registered office in Krakow, discusses the issue of using this “instrument” in business transactions.

A standard agreement

There is no legal definition of a standard agreement in the Polish legal system. However, on the basis of legislation and economic practice, one can attempt to define this concept. The standard agreement will be understood as contranct previously made by the contractor, which will, in principle, be identical for each client. This a standard agreement can thus be repeatedly used by the trader to conclude an agreement with a contractor. A standard agreement refers to a contract whose terms are to remain constant. Changes which only be made are the contractor’s data, the date of conclusion of the contract. Currently, the practice of using a standard agreement in business is very common. For example, banks, insurance companies, telecom operators, electricity providers, etc. are developing and using a standard agreements.

The character of the standard agreement

The idea of making standard agreement assumes that its provisions will be the same for all customers. This means that the other side of the contract has no right, no ability to negotiate even one clause contained in the standard agreement. It is only the obligation to review the content of the submitted document and its acceptance or rejection. The lack of negotiating capacity of a standard agreement specifies it as an adhesion contract. This is the so-called an agreement of accession, because the customer may conclude it or may refuse it. However, he can not modify its provisions.

The legal power of the standard agreement

The rule is, under Art. 384 of the Civil Code that a standard agreement binds a party if it was delivered before the date of the contract. However, if the use of a standard agreement is a practice established between the entities concerned, the content of standard agreement also binds the party when it can easily find out its content. If the terms of the contract are differ from the standard agreement then the contract is binding for parties.

Conformity of the standard agreement with the applicable law

As a rule, the provisions contained in the standard agreement are assumed to be in accordance with the applicable law. If they are a derivative of the regulations of a given service then it is assumed that the regulations are legal, so the standard agreement must also be. The problem arises when one of the clauses is against the rules.

Abusive clauses

Illegal contract terms in practice are called abusive clauses. Civil Code in Art. The 3853 contains a comprehensive catalog of provisions that may be considered as abusive clauses. First and foremost, these are limitation provisions that impose additional burdens on the consumer or limit his rights, clauses placing the trader in a privileged position. The rule is that abusive clauses are not binding.

Motives for the use of standard agreement

Enterprices decide to use a standard agreement for many reasons. The most popular motives for this action are:

  • Preparation and standardization offer for different groups of contractors
  • Speed up the contracting process
  • The contractor’s inability to negotiate the terms of the contract
  • Reusable
  • Simplification of business transactions
  • Improve business management

Abstract: Business Law, Corporate Law, Trade Law

The article was prepared by KG LEGAL KIEŁTYKA GŁADKOWSKI based in Cracow, Poland, specialising in cross border cases, with its focus on new technologies, IT and life science. It discuesses the essence of use the standard agreement in trade

Paweł Dyrduł, lawyer (specializing in banking law, financial law) from KG LEGAL KIEŁTYKA GŁADKOWSKI – PARTNERSHIP office in Cracow, specializing in cross border issues and servicing life science and IT companies, discusses the essence of using standard agreement in business transactions.