Belgium Sets Rules On Prohibited Unfair Terms In B2B Contracts

• Published date: 14 April 2021
• Subject Matter: Finance and Banking, Corporate/Commercial Law, Financial Services, Corporate and Company Law, Contracts and Commercial Law
• Law Firm: Pierstone
• Author: Mr Hannes Abraham and Maarten Vanderhaeghe

As of 1 December 2020, a new legal framework of mandatory rules on prohibited unfair terms in business-to-business (B2B) contracts will enter into force in Belgium. We summarize below the main features, application and practical significance of these rules, which will restrict the contractual freedom of businesses and could have a substantial impact on many B2B relationships. We hereby recommend that businesses already consider the new rules in contract negotiations as well as review their standard B2B terms and conditions now in order to ensure future compliance.

1. Main Features

In general, the Law of 4 April 2019 amending the Belgian Code of Economic Law ("CEL") ("the Law of 4 April 2019") established a new framework for B2B contracts in Belgium by introducing (i) a general prohibition on unfair terms as well as (ii) "black" and "grey" lists of terms which are deemed to be unfair.

The Law of 4 April 2019 provides in this regard that any unfair terms in B2B contracts are prohibited and therefore null and void. The B2B contract at issue will remain valid and binding unless it cannot continue to exist after the exclusion of the unfair term(s), in which case the contract will also be null and void.

1.a. General Prohibition

Similar to what currently applies to business-to-consumer ("B2C") contracts in Belgium, the new "catch-all" prohibition provides that a term in B2B contracts is unfair and therefore prohibited if it creates, by itself or in combination with other terms, a "significant imbalance" between the rights and obligations of the parties.

The Law of 4 April 2019 specifies that such imbalance will be assessed on the basis of the following elements, which must be considered at the time of conclusion of the contract and taking into the account the nature of the products to which the contract applies:

• All the circumstances surrounding the conclusion of the contract;
• The general economy of the contract;
• All applicable trade practices;
• All other terms of the contract or of other related contracts and
• The extent to which the terms in written contracts are drafted in a clear and understandable manner.

However, the assessment of an imbalance will not extend to the terms that define the object of the contract or the price or compensation for the products to be delivered, provided that such terms are drafted in a clear and understandable manner.

1.b. "Black List"

In addition to the general prohibition, the Law of 4 April 2019 lists the following types of...