In March 2019, the Belgian legislature approved a bill that prohibits unfair market practices, abuse of economic dependency, and the use of abusive terms in B2B relationships - that is, between companies. The provisions of this law were incorporated into the Economic Law Code and came into force on December 1, 2020.
This law significantly curtails the freedom of contract between companies.
The expanded regulation-inspired by the rules that were already in place much earlier in the B2C context-will undoubtedly also have an impact on your company's general terms and conditions and agreements.
Below we summarize the core principles.
1. Who? What? How?
The legislator aims at a general protection mechanism regarding unlawful terms. Hence the very broad scope of application. In particular, the law applies in principle:
- on all companies and in all industries. The legal form and size do not matter.
- to all contractual relationships between companies. Therefore, we are not only talking about general terms and conditions here, but about all provisions in contracts in the broadest sense of the word (ranging from commercial agency, distribution, IT ... to rental, service, management, contracting ...)
Note! The new rules only apply to agreements entered into, renewed or amended after December 1, 2020. Current agreements will therefore remain subject to the current rules until they are renewed or amended. Customers who receive your company's general terms and conditions for the first time after December 1 will therefore be able to rely on the new law.
2. Clause must be clear and unambiguous
Terms, no matter what document they are contained in, must be clear and unambiguous. Thus, not only a good structure is important, also the way the text is communicated or made available can be essential in the decision to be made by the court. With full knowledge of the facts, the parties must have had the opportunity, prior to the effective conclusion of the contract, to agree on its contents. This underlines once again the importance of providing invoice terms in advance (with an offer or order form) to your contracting party.
In addition, terms, which create an apparent imbalance between the rights and obligations of the contracting parties, will be unlawful.
Not every imbalance will lead to an illegality, as the imbalance must be sufficiently large. Thus, one party can still impose heavier obligations on the other party, but parties should strive for some reciprocity and equality in terms of contractual obligations and sanctions.
For example, an excessive severance payment or a clause providing for termination of the contract in the event of the slightest breach of contract ...
How this vague, open standard will be interpreted by the courts is still a matter of conjecture. What is certain is that the legislature wishes to somewhat level out manifest economic inequality between the "weaker" and "stronger" party by granting an additional weapon to the "underdog."
Besides this general assessment standard, the legislator also provides for a "black" and "grey" list of prohibited terms. The terms included in the black list are regarded as unlawful and prohibited. As for the terms included in the grey list, they are presumed to be unlawful but remain refutable.
The (vague) general standard of review will only have to be invoked if a contractual term cannot already be declared null and void on the basis of the provisions of the so-called black or grey list of unlawful terms.
3. If the clause is not ok....
If a term is unlawful, the aggrieved party may ask the court to declare the term null. Where appropriate, the clause in question will not apply to the contractual relationship between the contracting parties. In principle, the rest of the contract will stand, if at all possible without the clause in question.
It is advisable to screen both the general terms and conditions of your company and other contracts for clauses that do not comply with the new legislation. It is also important to check whether successive sales and services that may have been provided for many years are governed by an 'old' agreement or whether, in that case, new agreements are constantly being drawn up, as a result of which the new law applies.
We are happy to support you in this screening and can check whether your contracts are compliant with the new B2B law.