The prohibition on unfair terms between enterprises is celebrating its anniversary

The prohibition on unfair terms in agreements between enterprises applies to all enterprises, and to all types of agreements as well as to all terms concluded, renewed or amended from 1 December 2020. 

In other words, the size of your enterprise, the sector in which it is active, the form it has taken (sole proprietorship or company), the products or services it offers, ... play no role whatsoever regarding the applicability of these rules. 

There are only two exceptions to this – financial services and public procurement – that are expressly excluded from these rules.

In order to determine which terms are unfair, the legislator provided for a number of mechanisms in line with what already applies below for agreements with consumers. 

Thus the basic rule is that agreements and terms must be drawn up in a clear and comprehensible manner (Article VI.92/2 Belgian Code of Economic Law). Unclear or incomprehensible terms are not sanctioned in themselves, but run the risk of being deemed “unfair”.  

In addition, a general standard of review is foreseen. According to this standard, terms are deemed unfair if they, alone or in conjunction with one or more other terms, create a significant imbalance between the rights and obligations of the parties (Article VI.91/3 Belgian Code of Economic Law). 

Important is the fact that a terms can only be considered unfair if it concerns:

• a significant imbalance (not a minor/ordinary imbalance); and 
• a legal imbalance (not an economic imbalance). 

In other words, the existence of an (even significant) economic imbalance is irrelevant. What is relevant is whether the term creates an significant imbalance between the legal position of one enterprise in relation to the other. In order to assess this, one must take into account all the circumstances in which the agreement was concluded, the nature of the products or services, the prevailing trade practices (sector), and all other aspects of the agreement.

Furthermore, a blacklist was drawn up of terms that are by definition unfair and therefore always prohibited (Article VI. 91/4 Belgian Code of Economic Law), in particular the following: 

• Foreseeing an irrevocable commitment from the other party, while the performance of the enterprise’s services is subject to a condition, the fulfilment of which depends solely on its will.
• Giving the enterprise the unilateral right to interpret any term of the contract.
• In the event of a dispute, making the other party waive any means of redress against the enterprise.
• To irrefutably impose acquaintance or acceptance by the other party of terms that it was unable to know before concluding the agreement. 

Finally, there is a grey list of terms that are presumed to be unfair, but where proof to the contrary can be provided (Article VI.95/5 Belgian Code of Economic Law), in particular:

• Granting the enterprise the right to unilaterally change the price, features or terms and conditions of the agreement without a valid reason.
• Tacitly extending or renewing a fixed-term agreement, without stating a reasonable notice period.
• Placing the economic risk with one party without valuable consideration when normally such risk rests with the other enterprise or with another party to the agreement.
• Improperly excluding or limiting the legal rights of one party in the event of a total or partial breach of contract or default by the other enterprise on any of its contractual obligations.
• Without prejudice to Art. 1184 of the Belgian Civil Code, to bind the parties without giving a reasonable notice period.
• To release the enterprise from its liability for its wilful acts, its gross negligence or that of its appointees or for reasons of force majeure, for the non-performance of the essential obligations that are the subject of the agreement. Limiting the means of evidence on which the other party can rely.
• In the event of non-performance or delay in the performance of the other party’s obligations, to specify amounts of damage compensation that are manifestly disproportionate to the harm that may be suffered by the enterprise.

An unfair term is null and void, but the agreement may otherwise continue to exist. This will be the case if the void term is not essential in itself to the existence or performance of the agreement.

In other words, it is important to check whether your general terms and conditions and your contracts pass the test. If not, it is advisable to modify your general terms and conditions and your contracts in order to avoid unpleasant surprises with your contracting party in the case of a dispute.  

Our experts would be happy to assist you with this.