By Victoria Hunt and Victoria Lafite, University of Montpellier, Centre du Droit de l'Entreprise, Program of Master 2 "Droit du Commerce International"
Overview
Customary law and contract law can be seen as independent or complementary. In this latter perspective, some clauses try to govern rights which are based on informal behaviors, usages and customs (together, "customary rights"). This article gives illustrations and drafting advice relating to these provisions.
Illustrating Clauses Relating to Customary Rights
I. Entire agreement clauses
Provisions such as entire agreement clauses sometimes relate to customs. For example, we read the following clause: "This Agreement is the final, complete and exclusive agreement of the parties with respect to the subject matter hereof and supersedes and merges all prior contemporaneous proposals, discussions, negotiations [...] whether written or oral between the parties with respect to such subject matter and all past courses of dealing or industry customs". This clause excludes both courses of dealing based on practice (which are sometimes referred to as private usages) and customs relating to a profession (sometimes referred to as public usages). Depending on the circumstances, it could be appropriate to subject these two kinds of usages to specific regimes.
II. Codes of conduct
In compliance with corporate social responsibility (CSR), large companies adopt Codes of conduct with respect to their social and environmental undertakings. In those Codes of conduct, some provisions restrict the use of customary rights within professional areas. Thus, various CSR rules aim at dealing with practices concerning gifts, rewards and invitations. For instance, in the Airbus Standard of Business Conduct we read the following: "Gifts of a financial nature or other equivalent gifts such as gift cheques are by no means authorized". This prohibition applies to all Airbus employees, managers and directors. Nevertheless, in some countries usages related to gifts and invitations are important. Therefore, a conflict may arise between the Code of conduct rules and the local usages. The peculiar nature of usages as well as the application of the law of the act could be invoked to make the local usages prevail.
In some countries local usages are formalized in Codes of conduct. In Switzerland, the Code of conduct of the administration in Berne canton authorizes public employees to accept gifts or advantages given by courtesy of a low value under 200 Swiss francs.
Likewise, Codes of conduct often refer to harassment. For instance, the Airbus Standard of Business Conduct states and prohibits a type of harassment as following: "A conduct relating to sex which is unwanted by the person to whom it is directed". While some more specific provisions sometimes exist, this broad provision allows to express a concern without entering into embarrassing details.
III. Formalization of informal behaviors
Recently, the French public postal company La Poste has created a service called "Veiller sur mes parents" (Look out for my Parents) through which postmen stop at elderly people's homes while delivering the mail. Therefore, the informal visits have become regulated in terms of time and tariffs by means of contracts. This new service emphasizes a new trend that is to regulate in a provision questions that used to fall within the scope of courtesy or good manners.
Regarding this new trend, it is sometimes a usage to tip waiters for their service. The French Supreme Court ruled in 2013 that employers are in the obligation of defining in the employment contract the policy regarding tips if they wish to deduce them from the salary. In this particular case, there was no provision on the tips. Hence, the employer was in default by deducing it from the fixed salary.
Likewise, the general conditions of sale and use of the website of the French railway company "SNCF" provide that tips are not included in the price of the tickets and the following services. The usage of tips is recognised by the drafters who do not prohibit but exclude it from the price.
IV. Incoterms
In the world of international trade, Incoterms such as "FOB" (Free On Board) refer to the usages of the port of loading. In 2002, a French Court had to interpret a clause "FOB ANVERS" to hold that such usages call for the transfer of possession to occur not at the time the goods are loaded but before, at the time when the goods are handed over in the warehouses of the port according to the local usages of the Antwerp port. Such interpretation could be avoided by a more specific provision to determine when the local usages start to apply.
Examining Clauses Relating to Customary Rights
I. Availability of customary rights
The mere nature of customary rights may affect the possibility to formalize them by means of a contract. Thus, if it is possible to formalize a usage emerging from the relationship between two parties to an agreement, it is more difficult when it comes to customs relating to a profession or a company. Indeed, parties do not have the same ability to define or regulate their rights relating to such usages.
More radically, one may even assert that customary law is a set of rules that belongs to a specific legal order independent from the will of the parties as it has its own sources and own sanctions which are more social than directly financial. As a consequence, it could not be affected by contractual provisions.
II. Object of the contract
Defining the object of the contract is one of the difficulties a drafter may encounter. This is particularly true with respect to usages which are based on generalized behaviors.
Consequently, concerning usages relating to a profession or a company, the object of the provision must refer more to rights originating from usages than to the usages themselves.
A vague provision relating to a usage could be illustrated as follows: "Such records shall be maintained in accordance with generally accepted accounting practices and in a manner that facilitates auditing." Here, it is clear that the drafters wanted to refer to a usage. Nevertheless, the reference is too nebulous for the parties to know exactly which practices are targeted in the provision (from which country, which practices in particular, etc.). With respect to representations and warranties provided in share purchase agreements, standstill provisions provide a time period between the signing date and closing date during which the target company shall not enter into agreements containing unusual provisions. As "unusual provisions" is quite an unclear concept we could suggest, in order to define specific rights originating from usages, the following clause: "For a period of [years] [months] from the date of this Agreement, neither you nor any of your Representatives or affiliates will in any manner, directly or indirectly, without the prior written consent of the Buyer: advise, assist or encourage any other Persons in connection with any transaction for a global annual amount exceeding [X] millions euros".
III. Neutralization by imperatives statutes
Drafters must be aware that provisions relating to usages might be neutralized by imperative statutes. This advice is relevant for clauses that tend to define the termination notice period by referring to private usages.
Indeed, article L.442-6 I 5° of the French Commercial Code prohibits the sudden termination of an established business relationship without written advanced notice. The minimum period of time established by this article cannot be derogated by means of contractual clauses.
In the situation where the parties established a period of time according to their private usages which happens to be lower than the minimum period of time, this clause will be neutralized by the article L.442-6 I 5° of the French Commercial Code.
Conclusion
Some pictograms, by being generally used in contracts, have become usages in international trade. Nevertheless, misunderstandings concerning their meaning often occur. Thus, it is important to draft a provision with a clear definition of its content. In the particular field of agricultural pesticides, a report from the journal « Crop protection » shows that some pictograms commonly understood among farmers in Europe, are not understood the same way in Brazil. A study has shown that 93,4% of the farmers were unable to identify the pictograms for handling procedures of liquid pesticides. This last example shows that it is important for contract drafters to use contractual provisions to strictly define their meaning and impact.
Additional Resources
CASES
French Supreme Court, 5th June, 2013, n°12-12759 12-12760
Court of Appeal of Versailles, 14th March, 2002, n°2000-1291
BOOKS
Droit du commerce international. Jean-Michel Jacquet, Philippe Delebecque, Sabine Corneloup (2014), Dalloz
Les usages : l'autre droit de l'entreprise. (Ed.) P. Mousseron (2014), Lexis Nexis
Les incoterms, Etude d'une norme du commerce international. E. Jolivet (2004), Litec
DOCTRINE
Dynamics of corporate social responsibility: towards a new 'conception of control'. Thomas Lamarche, Marianne Rubinstein (2012), Journal of Institutional Economics
La responsabilité sociale de l'entreprise : enjeux, stratégies, impacts. Economies et finances. Aurélien Petit (2013)
La Bibliothèque des Usages, Centre du Droit de l'Entreprise, Montpellier, http://bibliotheque-des-usages.cde-montpellier.com/taxonomy/term/22,5
Dictionnaire du droit privé, Serge Braudo, Alexis Baumann,https://www.dictionnaire-juridique.com/lexique-juridique.php
Do farmers understand the information displayed on pesticide product labels? A key question to reduce pesticides exposure and risk of poisoning in the Brazilian Amazon. Andrea Viviana Waichman, Eve Evaldice, Nailson Celso da Silva Nina (2007), Journal of Crop Protection
INTERNATIONAL
Incoterms from the International Chamber of Commerce ICC https://iccwbo.org/resources-for-business/incoterms-rules/incoterms-rules-2010/
ICC Store http://store.iccwbo.org/incoterms-2
Airbus Standard of Business Conduct : http://company.airbus.com/company/ethics-compliance.html
Code of conduct of the administration in Berne canton: https://www.fin.be.ch/fin/fr/index/personal/anstellungsbedingungen/KantonalsArbeitgeber.assetref/dam/documents/FIN/PA/fr/fr_Personalamt_Verhaltenskodex_GZA.pdf