Your general terms and conditions and model contracts (B2B) after 1 December 2020 – What specifically will change for your business?
The law of 4 April 2019 introduces for the first time in Belgium ground rules to protect companies against abusive clauses in business-to-business (“B2B”) contracts. These new rules limit companies’ freedom of contract and will apply to all contracts concluded, amended or renewed between companies after 1 December 2020. As a result of its broad scope, the law will apply in B2B relationships to general terms and conditions, distribution agreements, buy-sell agreements, shareholder agreements and service agreements, among others.
The new B2B law provides for three categories of abusive clauses: (i) The general prohibition of any clause that, alone or in conjunction with other clauses, creates a manifest imbalance between the rights and obligations of the contracting undertakings; (ii) the ‘grey list’ and (iii) The ‘blacklist’. The potential impact of the B2B Act should not be underestimated, as the Act has a broad scope of application and the inclusion of an unlawful clause in a contract results in its nullity.
Specifically, the ‘grey’ list contains eight clauses suspected to be unlawful, including, among others, clauses that shift economic risk without consideration and clauses that improperly exclude or limit a party’s legal rights in the event of the company’s default or defective performance of any of its contractual obligations. The grey list creates great uncertainty.
In M&A practice, for example, it is common practice to shift risk between parties, whether or not by using representations & warranties and limiting liability. These are often also important negotiating points in a buy-sell agreement. With the new B2B law, “inappropriate” exclusions or limitations of liability (cap, basket, etc.), deviations from the “normal” allocation of risk between parties and “inappropriate” limitation of contractual limitation periods come into focus. It will have to wait and see how courts will interpret such clauses in the light of the B2B Act.
Finally, there is a ‘black list’ of four clauses that are always considered unlawful in contracts between companies, such as, for example, unilateral interpretation clauses or irrefutable knowledge and acceptance clauses. Do your general terms and conditions provide for a notice and acceptance clause of the general terms and conditions? Beware, going forward, such clauses will only be valid if the contracting company also has or has been given the effective opportunity to take cognisance of your general terms and conditions.
Customisation will become more essential than ever when drafting your clauses to avoid discussions and uncertainty. Quorum is happy to advise you on screening your current model contracts and general terms and conditions in order to adapt them to the new B2B law. You can always contact your regular contact at Quorum for this or send an e-mail to firstname.lastname@example.org.