The empirical proposition that legal disputes are won on the facts and circumstances of the case is born of painful experiences of insufficient evidence and proof in civil proceedings. Without proof, favourable facts are worth nothing. In many cases, the parties have only made verbal agreements so it is often very hard to furnish proof. Not every witness is neutral, credible or able to recall the exact course of events in sufficient detail. The opposing party can checkmate witnesses by resorting to a whole host of litigation tactics.
German law describes the concept of the “Commercial Letter of Confirmation” and has developed principles with regard to the failure to produce a commercial letter of confirmation which, despite their underuse, can provide useful evidence. The people involved in a Commercial Letter of Confirmation must, to a greater or lesser extent, participate in business life in a commercial capacity, i.e. not as private individuals. In a Commercial Letter of Confirmation, one of the contracting parties definitively describes an event, in a binding way and with the necessary degree of certainty. Essentially, the letter must set out the outcome of contract negotiations, in writing, by fax, by e-mail etc. The prerequisite is that the parties have, to some extent at least, reached agreement verbally, which can include over the phone, rather than exclusively in written contract negotiations. In order that, in the worst-case scenario, it can be used as effective proof, the letter should be clearly and unambiguously worded and establish the basis of the transaction, the order of events, the time and location of and the participants in the negotiations, in an introductory section similar to a preamble. The letter of confirmation must have been received by the recipient immediately after the contract negotiations, within 1 week at most. If the other contracting party does not immediately – i.e. within no more than 3 days – dispute the letter, the contract will be concluded as per the content of the letter of confirmation and the letter’s content will be deemed to have been confirmed. However, there must not be any disagreement between the parties at the outset regarding the content of the contract, e.g. different content in letters of confirmation which cross in the post or contradictions to General Terms of Business. This method of drafting a contract must not be abused by deliberately making a false statement or statements that are so far removed from the actual outcome of negotiations that the sender cannot reasonably expect the recipient to agree to them. An example of this would be if the sender has included unreasonable or non-customary stipulations in the letter of confirmation. As the confirmation refers to verbal understandings, which constitute individually negotiated terms, the content is not subject to the same (rigorous) checking requirements as General Terms of Business. It is advisable not to stipulate in a Commercial Letter of Confirmation that the letter must be confirmed in writing, as this could mean that the letter is considered solely as an offer that will not be effective until accepted in writing.
Opinions are divided as to whether a Commercial Letter of Confirmation must be signed by hand as proof (making it a private deed).The prevailing opinion is that it should, given the probative requirements of private deeds. If there is an effective private deed, the statements made in that deed are considered complete and accurate. The opposing party would have to prove the contrary in order to invalidate this assumption. If there is no concrete evidence for this, in many cases the only available option is to challenge the authenticity of the letter. In court proceedings, the original Commercial Letter of Confirmation must be presented; if need be, the opposing party can demand its presentation in court. If the opposing party then claims that the letter has been lost, the sender will be deemed to have succeeded in providing proof.
When properly worded, therefore, a Commercial Letter of Confirmation can serve as valuable proof in business dealings between businessmen and people acting in an equivalent capacity, which can be used to prove the facts and circumstances.