New rules on unfair contract terms for B2B contracts

By Charles Price and Sébastien Popijn

New rules on unfair contract terms for B2B contracts

On 21 March 2019, the Belgian Parliament has approved a draft Law which applies the rules on unfair contract terms to B2B contracts. Previously this type of legislation had only applied to B2C contracts.

What is a B2B unfair term?

Applying the same test as for the B2C relationship, the new Law provides that “any term of a contract between businesses is unfair if, on its own or in combination with one or several other terms, it creates a significant imbalance in the parties’ rights and obligations”.

In addition to this general definition, the Law includes (i) a black list of terms which are per se unfair and (ii) a grey list of terms which are presumed unfair unless the contrary is proven.

(i) Black list terms are terms which :

  • provide for an irrevocable commitment by one party, whereas the performance by the other party is subject to a condition which is at the discretion of the said other party;
  • grant a party with a unilateral right to interpret any term of the contract;
  • waive all the rights of recourse of the other party in the event of a dispute;
  • state that a party is irrevocably deemed to have knowledge of, or to have accepted, terms with which the said party has not had the opportunity of becoming acquainted prior to entering into the contract.

(ii) Grey list terms are terms which :

  • allow a party to unilaterally change, without valid reason, the price, the characteristics or the terms of the contract;
  • tacitly extend or renew a fixed-term contract without providing for a possibility of termination on reasonable notice;
  • transfer, without proper consideration, the economic risk to a party where the risk is usually the sole responsibility of the counterparty or another party to the contract;
  • inappropriately exclude or limit the legal rights of a party, in the event of a total or partial non-performance or inadequate performance by the other party of any of the terms of the contract;
  • bind parties without providing for a right of termination on reasonable notice;
  • exclude or limit liability in the case of fraud or gross negligence;
  • restrict the type of evidence available to a party;
  • provide for damages for non- or late performance by the other party which manifestly exceed the possible injury suffered by the providing party.

 

Which type of contracts are subject to the Law?

The new legislation applies to all types of B2B contracts except for financial services and government procurement contracts.

Quid re choice of law or jurisdiction clauses?

Interestingly, the law does not contain any provision in relation to choice of law or jurisdiction clauses. This is presumably due to the provisions of EU Regulations and international treaties which are binding on Belgium and which validate such clauses.

Remedies under the Law

Unfair terms are prohibited and are null and void. The remainder of the contract continues to be binding and in force provided the unfair term(s) is/are separable from the contract.

Entry in force

The new Law will enter in force the first day of the nineteenth month following the month in which the Law will be published in the Belgian Official Gazette. It will apply only to contracts which are entered into, renewed or modified after that date.

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Authors: Charles Price (charles.price@cew-law.be) and Sébastien Popijn (sebastien.popijn@cew-law.be)