You know it: you visit an online webshop and before you can order that one beautiful item of clothing, you have to read and accept the general terms and conditions. Of course, no one reads them; but what if there is something reallyunfair in them?
For the consumer, Belgian law has for some time been providing for a solution to tackle unfair terms in the B2C relationship. Businesses cannot include in their contracts with consumers clauses that apparently create an imbalance for the consumer. The aim of such a regulation is to protect the weaker consumer against the (financially) stronger company.
But what about B2B contracts? So far, there is no clear regulation that allows a company to combat abusive terms in its relationship with another company. Well, this is going to change!
Indeed, on 21 March 2019, the Bill to amend the Economic Law Code with regard to the abuse of economic dependence, unfair terms and unfair market practices between companieswas approved by the Belgian Parliament. With this proposal, three important measures are created to protect financially weaker companies in their relationship with other companies. In this article, we zoom in on the new rules on unfair terms.
The regulation on unfair terms introduces three important innovations for B2B contracts.
- Apparent imbalance
First of all, a contractual term can now also be found to be unfair in B2B contracts if, whether or not in conjunction with other terms, it creates an apparent imbalance to the detriment of the ‘weaker’ company. The aggrieved company (regardless of its size) will always be able to invoke the nullity of such an unlawful act.
- Black list
In addition, as in consumer law, the bill formulates a black list of unfair terms. These are terms that must in all cases be regarded as unlawful and, moreover, are prohibited in a B2B agreement. More specifically, these are clauses that:
- provide for an irrevocable obligation on the part of the other party while the performance of the undertaking’s services is subject to a condition, the performance of which depends solely on its will
- give the undertaking the unilateral right to interpret any term of the contract
- in the event of a dispute, dissuade the other party from bringing any action against the undertaking
- irrefutably establish the knowledge or acceptance of the other Party by means of terms which it has not had actual knowledge of prior to the conclusion of the contract
- Grey list
A third novelty in the bill is the so-called grey list of unfair stipulations. These are unfair stipulations that are suspected of being unlawful, but for which the stronger company can always prove the contrary. For example, it is accepted that evidence to the contrary can be provided by demonstrating that both parties did indeed wish to include the clause in the contract. The grey list concerns clauses that are not included in the contract:
- give the undertaking the right to unilaterally alter the price, characteristics or terms of the contract without valid reason
- tacitly renew or extend a fixed-term contract, without giving reasonable notice
- impose, without consideration, the economic risk on one party, if it is normally borne by the other company or by another party to the contract
- unduly exclude or limit the legal rights of a party in case of total or shared breach of contract or defective performance by the other company of any of its contractual obligations
- without prejudice to article 1184 of the Civil Code, to bind the parties without giving a reasonable period of notice
- release the undertaking from its liability for its willful misconduct, its serious misconduct or that of its employees or, except in cases of force majeure, for failure to perform the essential obligations which are the subject of the contract
- to limit the evidence available to the other party
- in the event of non-performance or delay in performance of the other Party’s obligations, determine the amounts of compensation which are clearly disproportionate to the prejudice which may be suffered by the undertaking
Scope of application
The new regime will apply to any B2B agreement, with the exception of contracts relating to financial services and public procurement. In such a case, however, it is always possible to introduce an exception by means of a Royal Decree.
The law will enter into force on 1 December 2020. The regulation will only apply to agreements concluded, modified or renewed after the date of entry into force. As a result, the B2B agreement that is already in force will not be able to benefit from such protection.
This new law seeks to protect small businesses and the self-employed when they conclude a contract with other (often larger) companies. However, this needs to be nuanced in terms of clauses that are on the grey list. As soon as the large company can demonstrate that both parties actually wanted the clause, the nullity can no longer be invoked. However, it must be said that the provision of such proof becomes much more difficult in the case of standard clauses in the general terms and conditions.
Of course, we cannot ignore the fact that this new regulation will have an enormous impact on the freedom of contract between companies, but also on the general management within a company. Furthermore, it remains to be seen how such a regulation will be interpreted by the courts.
In any case, it is wise to carry out a review of the current conditions within your company, in order to check whether adjustments are necessary. Our contract specialists are always there for you, and can be contacted via firstname.lastname@example.org.
To be continued!
Written bij Helena Depaepe, Legal adviser deJuristen