Unfair terms between undertakings: entry into force on 1 December 2020!

As the third and last part of the law of 4 April 2019 (B2B law) to enter into force, after unfair practices (01/09/2020) and abuse of economic dependence (22/08/2020), certain clauses in contracts between undertakings (B2B) concluded, renewed or otherwise amended as from 1 December 2020 may as from that date be considered unfair.

Realising that like in B2C contracts, there could also be imbalances in power relationships between parties in B2B contracts, the legislator saw fit to intervene in order to try and maintain a certain balance between parties in B2B relationships. Admittedly, this is probably the aspect of the B2B law that will have the greatest impact on the life of businesses as it will permeate their entire contractual practices.

We briefly address and recall in this newsletter the main novelties of this part of the B2B law.

First, it introduces a general prohibition of unfair terms in B2B contracts. A term will be considered unfair under the B2B law if, on its own or in combination with one or more other terms, it creates a manifest imbalance between the rights and obligations of the parties to the contract.

A clause in a contract that proves to be unfair will be prohibited hence null and void. The unfairness of a clause shall be assessed in particular by taking into account the circumstances surrounding the conclusion of the contract together with the nature of the products or services which are the subject of the contract, the general scheme thereof, commercial practices and the other terms of the contract.

Second, the B2B law introduces a double list of prohibited terms: a so-called “black list” of terms presumed unfair in all circumstances (irrebuttable presumption) and a so-called “grey list” of terms presumed unfair until proven otherwise (rebuttable presumption). In contrast to the terms of the black list, those on the grey list may be upheld provided the undertaking succeeds in demonstrating their fairness in light of the circumstances of the case or if they embody a genuine willingness on the part of the parties to insert such terms in their contractual relationship.

Among the clauses included in the black list are those which aim at:

• providing for an irrevocable commitment of the other party, while the performance of the undertaking’s obligations is subject to a condition the fulfilment of which depends solely on its will;
• granting the undertaking the unilateral right to interpret any clause of the contract;
• in the event of a conflict, having the other party waive all means of recourse against the undertaking;
• irrefutably ascertaining the knowledge or the acknowledgement of the other party to clauses of which it has not actually had the opportunity to become acquainted with prior to the conclusion of the contract.

Among the clauses included in the grey list are those which are intended to:

• authorise the undertaking to unilaterally change the price, characteristics or conditions of the contract without a valid reason;
• tacitly extend or renew a fixed-term contract without providing for a reasonable notice period;
• shift the economic risk on one party without any counterpart when the risk is normally incumbent on the other undertakings or on another party to the contract;
• inappropriately exclude or limit the legal rights of one party in the event of a total or partial non-performance or defective performance by the other undertaking of one of its contractual obligations;
• without prejudice to article 1184 of the Civil Code, engage the parties without specifying a reasonable notice period;
• discharge the undertaking from its liability for fraud, serious misconduct or that of its employees or except in cases of force majeure for any failure to perform the essential obligations of the contract;
• limit the means of proof that the other party may use;
• fix the amount of damages that may be claimed in the event of non-performance or delay in the performance of the other party’s obligations which manifestly exceed the damage to be suffered by the undertaking.

It will be up to case law, not without difficulty, to define the contours of this new regulation. The wording of certain terms will clearly lead to numerous conflicts whether during the negotiation of contracts or before courts as the wording of the general prohibition of unfair terms and the prohibitions in both the black and the grey lists is vague.