B2B Contractual Clauses

Written on 7 Jan 2020

The final part of the Act entering into force lays down several rules applying to B2B agreements, which is close to the system already prevailing for contractual clauses in B2C relationships as set out under Book VI of the CEL. This part of the Act enters into force on 1 December 2020.

Scope

These rules will apply to all types of agreements between all types of enterprises regardless of their size or market power (unlike the rules on abuse of economic dependence). Therefore, not only an enterprise’s terms and conditions will be targeted but all of the agreements it enters into with other enterprises.

So far, by way of exception, the Act provides that agreements involving financial services or public procurement will be exempted from these rules. However, the Act provides for the possibility to render these partially applicable to such agreements by royal decree.

Rules

  1. The clauses of the contract must be drafted in a clear and understandable manner

This principle, already existing in B2C agreements, will now also apply to B2B agreements although it will be less far-reaching. According to the Belgian Parliament, this clause aims to guarantee that a party knowingly makes the decision to enter into an agreement. For this purpose, contractual terms of a party should be sufficiently accessible and understandable to the other party. Moreover, enterprises should avoid using equivocal or contradictory terms.

  1. The contractual clauses can be interpreted according to the market practice in direct relation with them

The Act adds an additional interpretation rule, aligned to a pre-existing rule for B2C agreements completing the general rules on interpretation of agreements set out in our Civil Code

  1. Abusive contractual clauses

A contractual clause will be deemed abusive when, by its own or combined with one or several other clauses, it creates an obvious imbalance between the rights and obligations of the parties. To determine whether a clause is “abusive“, it will be interpreted taking into account (i) the object of the agreement, (ii) the circumstances surrounding its conclusion, (iii) the agreement’s main objective and economics, (iv) commercial usage in the sector at stake, (v) other clauses from the same agreement or another related agreement between the parties and, according to the Parliament (vi) with specific legislation (such as the Act of 2 august 2002 on combating late payment in commercial transactions).

This rule does not apply to “core clauses” being the object of the contract and the adequacy of compensation (provided that these clauses are drafted in a clear and understandable manner).

Clauses qualifying as abusive are forbidden and null and void. In addition to this general rule, the Act provides for two list of contractual clauses that are deemed to be abusive:

Black List

The following clauses are considered de facto abusive and will be deemed null and void:

  • in the contract the irrevocable commitment of a party, while the performance of the obligations of the other party depends on their sole will;
  • granting the unilateral right to interpret a clause of the contract;
  • in case of a dispute, making the other party waive its rights to any legal recourse;
  • stating that a party has knowledge of certain clauses while, in reality, it was not aware of such clauses before the conclusion of the contract.

Grey List

The following clauses are presumed to be abusive. They will be deemed null and void unless the party benefitting from the clause can substantiate that it is not abusive, taking the contractual relationship between parties into account. For these purposes, parties will refer to the general principles of interpretation set out above:

  • allowing a party to unilaterally modify the price, characteristics or conditions of a contract without any valid reason;
  • tacitly renewing a fixed-term contract without specifying a reasonable termination notice period;
  • setting, without compensation, the economic risk on a party while such risk should normally rests with the other party;
  • excluding or limiting, in an inappropriate manner, a party’s legal rights in case of non-performance or unsatisfactory performance of the other party’s obligations;
  • committing the parties in a contract, without foreseeing any reasonable notice period, to terminate (outside of cases of termination for breach or enforced performance of contract);
  • releasing a company from any liability in case of fraud, gross negligence, or non-performance of an essential obligation of the contract (except in case of “force majeure”);
  • limiting the means of evidence that the other party can use;
  • foreseeing liquidated damages (in case of delay or non-performance by the other party) that clearly go beyond the prejudice that could have been suffered by the party enforcing the contract.

According to a specific procedure, the Act allows that other forbidden clauses can be added, for specific sectors or categories of products, by means of Royal Decree.

When should I get prepared?

This set of rules applies as from 1 June 2020 to new agreements entered into past this date. The same applies to amendments or renewal of agreements. Therefore, your business should consider and list which of its existing agreements are to be renewed, extended or amended in order to set expectations and prepare in due course for upcoming negotiations.