The Act of 4 April 2019: Protecting enterprises by limiting contractual freedom?

• Belgium

• Litigation and dispute management

12-07-2019

Enactment of the Act of 4 April 2019 modifying the Code on Economic Law with regard to the abuse of economic dependency, unfair contract terms and unfair market practices between enterprises.

Summary                                                         

The aforementioned Act focusses on certain provisions aimed at the protection of enterprises with regard to unfair terms in B2B contracts. These rules already existed to some extent, but only in favour of consumers (B2C).

These provisions can be divided into three sets:

Unfair contract terms

These provisions are aimed at the protection of enterprises that are entering into a contract with other enterprises in order to avoid a significant imbalance between the rights and obligations of both parties.

Well-known examples are the so-called black list (clauses that are unfair and require no further assessment) and grey list (clauses that are unfair, unless proof to the contrary is provided) of contract terms, which are considered prohibited and therefore null and void.

Examples of the black list:

• Give the enterprise the unilateral right to interpret any term in the contract
• Create an irrevocable contractual obligation for the other party while the performance of that obligation is subject to a condition of which the realisation depends entirely on the will of the enterprise.

Examples of the grey list:

• Give the enterprise the right to unilaterally modify, without any valid reason, the price, the characteristics or terms of the contract
• Fix damage amounts that are manifestly disproportionate to the damage that may be suffered by the enterprise in the event of non-performance or delay in performance of the contractual obligations by the other party.
• Tacitly extend or renew a fixed-term contract without providing a reasonable notice period

Abuse of economic dependence

These are provisions aimed at prohibiting an enterprise to abuse a position of economic dependence of another enterprise, by which competition on the Belgian market or a substantial part of it can be affected.

Could be abusive for example:

• Refusal of a sale, purchase or other transaction terms
• Directly or indirectly imposing unfair purchase or sales prices or other unfair contract terms

Unfair market practices

These provisions are aimed a prohibiting and/or limiting misleading and aggressive market practices between enterprises. Note that the Act introduces a new distinction between misleading market practices and aggressive market practices.

Impact Date

There are three sets of provisions that will enter into force at different times:

• Provisions regarding abuse of economic dependency: These provisions will enter into force on the first day of the thirteenth month following the month of publication of the Act in the Belgian Official Gazette.
• Provisions regarding unfair contract terms: These provisions will enter into force on the first day of the nineteenth month following the month in which the Act is published in the Belgian Official Gazette, but only for contracts concluded, renewed or modified after that date of entry into force.
• Provisions regarding unfair market practices: These provisions will enter into force on the first day of the fourth month following the month of publication of the Act in the Belgian Official Gazette.

The Act was published in the Belgian Official Gazette on May 24, 2019.

Implications / Risks

Seeing that the protection that was granted towards consumers (B2C) has now been expanded to enterprises (B2B), it will be important to update the contractual terms, and especially the specific ‘General Terms & Conditions’, in order to avoid having (parts) of the contract and/or ‘General Terms and Conditions’ being declared null and void by the courts.

In case of abuse of economic dependence, the contract can be declared null and void too, but additionally fines can be issued. Similarly, there are also sanctions in the case of unfair market practices.