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UNFAIR PROVISIONS IN GENERAL TERMS AND CONDITIONS

unfair provisionsWhat would be the problem caused by unfair provisions in your general terms & conditions? In a previous post, we talked about provisions that can turn your terms and conditions into an effective weapon and shield. In this article, we’ll take a closer look at the trap of unfair clauses that could make your terms and conditions unenforceable.

 

Reciprocity and balance

 

Contractual freedom is restricted by the prohibition of unfair terms. The sanction may be the invalidity of the provision concerned (or even combinations of relevant provisions), but not the invalidity of the agreement, unless a clause was so essential that its invalidity affects the contract (see amendments, in Dutch or French only, to the law proposal amending the Code of Economic Law regarding the abuse of a significantly dominant position – 02/12/2019).

An important interpretation is the difference between the principle of reciprocity and that of balance in general conditions. The freedom to contract in the B2C trade has already been restricted. It will also be restricted to the B2B market at the end of this year, but not in the same way.

 

Unfair terms in consumer contracts

 

In consumer contracts, considerable importance is given to both the principle of reciprocity and that of balance. When these principles are not respected in consumer contracts, we speak of an unfair term.

 

The fine print of the CEL

 

The Code of Economic Law (CEL) states the following (click here for the full text (NL or FR)):

 

[What is an unfair term?]

 

Art. I.8. 22 ° (translated) “Unfair provision: any provision or any condition in a contract between a business and a consumer which, by itself or in combination with one or more other clauses or conditions, creates a manifest imbalance between the rights and obligations of the parties to the detriment of the consumer; ”

 

[List of unfair terms:]

 

  • Art. VI.83. (translated) “In the contracts concluded between a company and a consumer, are in any case unfair, the clauses and conditions or the combinations of clauses and conditions which have for object:” [among others:]

o Art. VI.83. 17 ° (translated) “determine the amount of the compensation due by the consumer who does not perform his obligations, without providing for equivalent compensation to be borne by the company which does not perform his obligations; “

 

What about your indemnity clause?

 

In the debt collection industry, we see a lot of lump sum indemnity clauses. We note here that they are only legally valid if they are reciprocal. When you, as an entrepreneur (natural or legal person), request compensation for, for example, late payment, then your general terms and conditions should also include compensation to the consumer for, for example, late delivery.

 

Unfair terms in commercial transactions

 

From December 1, 2020, contractual freedom will also be limited for B2B transactions, for agreements concluded, renewed or modified after December 1, 2020 (except for agreements relating to financial services and public procurement). This mainly concerns the balance in the general conditions. In addition, the clauses must also be clear and intelligible. It is therefore preferable to attach the general conditions to the purchase orders / order confirmations / invoices, and to put them online.

 

Apparent imbalance as a standard of general evaluation

 

The Code of Economic Law (CEL) states the following:

 

[What is an unfair term?]

 

  • Art. VI.91 / 3. § 1. (translated) “For the application of this title, any clause of a contract concluded between businesses is abusive when, on its own or in combination with one or more other clauses, it creates a manifest imbalance between the rights and obligations of the parties. “

 

[Criteria for assessing illegality]

 

  • 2. (translated) “The abusive nature of a contractual clause is assessed by taking into account the nature of the products which are the subject of the contract and by referring, at the time of the conclusion of the contract, to all the circumstances surrounding its conclusion. , the general scheme of the contract, the commercial uses that apply, as well as all the other clauses of the contract, or of another contract on which it depends. “

“For the assessment of unfairness, account is also taken of the requirement for clarity and intelligibility referred to in Article VI.91 / 2, paragraph 1. “

“The assessment of the unfair nature of the clauses does not relate either to the definition of the main object of the contract or to the adequacy between the price or the remuneration, on the one hand, and the products to be provided in return, on the other hand, provided that these clauses are drafted clearly and understandably.

 

An apparent imbalance is therefore abusive. An apparent imbalance occurs when there is an obvious imbalance between the rights and obligations of the parties. Reciprocity is not necessary, the need for balance is a larger concept. The “notion of appearance” plays a key role this time: there must be a “manifest” legal imbalance, because perfect legal equality must not be guaranteed. A party may therefore have more onerous obligations or be granted more rights. The apparent imbalance is not linked to an economic (im)balance either.

Judges can use the assessment criteria set out in law to declare a term lawful or illegal.

 

Black and gray list

 

An “apparent imbalance” remains a rather vague concept that only activates when a clause in the agreement cannot be overruled by so-called black or grey list provisions.

 

The black list contains a summary of the prohibited clauses (art. VI.94 / 4 CDE): (translated) “Art. VI.91 / 4. Are abusive, the clauses which aim to:

  1. provide for an irrevocable commitment from the other party, while the performance of the company’s services is subject to a condition the fulfillment of which depends on its sole will;
  2. give the company the unilateral right to interpret any clause of the contract;
  3. in the event of a conflict, have the other party waive any means of recourse against the company;
  4. establish irrefutably the knowledge or adherence of the other party to clauses which it has not had the opportunity to take cognizance of before the conclusion of the contract. “.”

 

The gray list (art. VI.91 / 5 CEL) enumerates the clauses (translated) “presumed to be unfair, for which the company can provide proof that, taking into account the circumstances and characteristics of the contract, the clause does not create a manifest imbalance between rights and obligations of the parties. ”. (see amendments, in Dutch or French only, to the law proposal amending the Code of Economic Law regarding the abuse of a significantly dominant position – 02/12/2019).

Art. VI.91 / 5.(translated) “Are presumed to be abusive, unless proven otherwise, the clauses which aim to:

  1. authorize the company to unilaterally modify the price, characteristics or conditions of the contract without valid reason;
  2. tacitly extend or renew a fixed-term contract without specifying a reasonable period of termination;
  3. place, without consideration, the economic risk on one part when it normally falls on the other company or another party to the contract;
  4. to exclude or inappropriately limit the equal rights of a party, in the event of total or partial non-performance or defective performance by the other company of one of its contractual obligations;
  5. without prejudice to article 1184 of the Civil Code, bind the parties without specifying a reasonable period of termination;
  6. release the company from its liability because of its fraud, its serious fault or that of its employees or, except in cases of force majeure, due to any non-performance of the essential commitments which are the subject of the contract;
  7. limit the means of proof that the other party can use;
  8. set the amounts of damages claimed in the event of non-performance or delay in the performance of the obligations of the other party which exceed the extent of the damage likely to be suffered by the company. “.”

 

What about your indemnity clause?

 

First, make sure your terms and conditions are clear and easily available; take into account the grey and mainly black list of (abusive) clauses, and; anticipate these new orientations for contracts from December 2020.

 

If you have any questions about your general conditions and / or the above stipulations, do not hesitate to contact us (or +32 16 74 52 00 or sales@tcm.be).

 

Sources

UNFAIR PROVISIONS IN GENERAL TERMS AND CONDITIONS

unfair provisionsWhat would be the problem caused by unfair provisions in your general terms & conditions? In a previous post, we talked about provisions that can turn your terms and conditions into an effective weapon and shield. In this article, we’ll take a closer look at the trap of unfair clauses that could make your terms and conditions unenforceable.

 

Reciprocity and balance

 

Contractual freedom is restricted by the prohibition of unfair terms. The sanction may be the invalidity of the provision concerned (or even combinations of relevant provisions), but not the invalidity of the agreement, unless a clause was so essential that its invalidity affects the contract (see amendments, in Dutch or French only, to the law proposal amending the Code of Economic Law regarding the abuse of a significantly dominant position – 02/12/2019).

An important interpretation is the difference between the principle of reciprocity and that of balance in general conditions. The freedom to contract in the B2C trade has already been restricted. It will also be restricted to the B2B market at the end of this year, but not in the same way.

 

Unfair terms in consumer contracts

 

In consumer contracts, considerable importance is given to both the principle of reciprocity and that of balance. When these principles are not respected in consumer contracts, we speak of an unfair term.

 

The fine print of the CEL

 

The Code of Economic Law (CEL) states the following (click here for the full text (NL or FR)):

 

[What is an unfair term?]

 

Art. I.8. 22 ° (translated) “Unfair provision: any provision or any condition in a contract between a business and a consumer which, by itself or in combination with one or more other clauses or conditions, creates a manifest imbalance between the rights and obligations of the parties to the detriment of the consumer; ”

 

[List of unfair terms:]

 

  • Art. VI.83. (translated) “In the contracts concluded between a company and a consumer, are in any case unfair, the clauses and conditions or the combinations of clauses and conditions which have for object:” [among others:]

o Art. VI.83. 17 ° (translated) “determine the amount of the compensation due by the consumer who does not perform his obligations, without providing for equivalent compensation to be borne by the company which does not perform his obligations; “

 

What about your indemnity clause?

 

In the debt collection industry, we see a lot of lump sum indemnity clauses. We note here that they are only legally valid if they are reciprocal. When you, as an entrepreneur (natural or legal person), request compensation for, for example, late payment, then your general terms and conditions should also include compensation to the consumer for, for example, late delivery.

 

Unfair terms in commercial transactions

 

From December 1, 2020, contractual freedom will also be limited for B2B transactions, for agreements concluded, renewed or modified after December 1, 2020 (except for agreements relating to financial services and public procurement). This mainly concerns the balance in the general conditions. In addition, the clauses must also be clear and intelligible. It is therefore preferable to attach the general conditions to the purchase orders / order confirmations / invoices, and to put them online.

 

Apparent imbalance as a standard of general evaluation

 

The Code of Economic Law (CEL) states the following:

 

[What is an unfair term?]

 

  • Art. VI.91 / 3. § 1. (translated) “For the application of this title, any clause of a contract concluded between businesses is abusive when, on its own or in combination with one or more other clauses, it creates a manifest imbalance between the rights and obligations of the parties. “

 

[Criteria for assessing illegality]

 

  • 2. (translated) “The abusive nature of a contractual clause is assessed by taking into account the nature of the products which are the subject of the contract and by referring, at the time of the conclusion of the contract, to all the circumstances surrounding its conclusion. , the general scheme of the contract, the commercial uses that apply, as well as all the other clauses of the contract, or of another contract on which it depends. “

“For the assessment of unfairness, account is also taken of the requirement for clarity and intelligibility referred to in Article VI.91 / 2, paragraph 1. “

“The assessment of the unfair nature of the clauses does not relate either to the definition of the main object of the contract or to the adequacy between the price or the remuneration, on the one hand, and the products to be provided in return, on the other hand, provided that these clauses are drafted clearly and understandably.

 

An apparent imbalance is therefore abusive. An apparent imbalance occurs when there is an obvious imbalance between the rights and obligations of the parties. Reciprocity is not necessary, the need for balance is a larger concept. The “notion of appearance” plays a key role this time: there must be a “manifest” legal imbalance, because perfect legal equality must not be guaranteed. A party may therefore have more onerous obligations or be granted more rights. The apparent imbalance is not linked to an economic (im)balance either.

Judges can use the assessment criteria set out in law to declare a term lawful or illegal.

 

Black and gray list

 

An “apparent imbalance” remains a rather vague concept that only activates when a clause in the agreement cannot be overruled by so-called black or grey list provisions.

 

The black list contains a summary of the prohibited clauses (art. VI.94 / 4 CDE): (translated) “Art. VI.91 / 4. Are abusive, the clauses which aim to:

  1. provide for an irrevocable commitment from the other party, while the performance of the company’s services is subject to a condition the fulfillment of which depends on its sole will;
  2. give the company the unilateral right to interpret any clause of the contract;
  3. in the event of a conflict, have the other party waive any means of recourse against the company;
  4. establish irrefutably the knowledge or adherence of the other party to clauses which it has not had the opportunity to take cognizance of before the conclusion of the contract. “.”

 

The gray list (art. VI.91 / 5 CEL) enumerates the clauses (translated) “presumed to be unfair, for which the company can provide proof that, taking into account the circumstances and characteristics of the contract, the clause does not create a manifest imbalance between rights and obligations of the parties. ”. (see amendments, in Dutch or French only, to the law proposal amending the Code of Economic Law regarding the abuse of a significantly dominant position – 02/12/2019).

Art. VI.91 / 5.(translated) “Are presumed to be abusive, unless proven otherwise, the clauses which aim to:

  1. authorize the company to unilaterally modify the price, characteristics or conditions of the contract without valid reason;
  2. tacitly extend or renew a fixed-term contract without specifying a reasonable period of termination;
  3. place, without consideration, the economic risk on one part when it normally falls on the other company or another party to the contract;
  4. to exclude or inappropriately limit the equal rights of a party, in the event of total or partial non-performance or defective performance by the other company of one of its contractual obligations;
  5. without prejudice to article 1184 of the Civil Code, bind the parties without specifying a reasonable period of termination;
  6. release the company from its liability because of its fraud, its serious fault or that of its employees or, except in cases of force majeure, due to any non-performance of the essential commitments which are the subject of the contract;
  7. limit the means of proof that the other party can use;
  8. set the amounts of damages claimed in the event of non-performance or delay in the performance of the obligations of the other party which exceed the extent of the damage likely to be suffered by the company. “.”

 

What about your indemnity clause?

 

First, make sure your terms and conditions are clear and easily available; take into account the grey and mainly black list of (abusive) clauses, and; anticipate these new orientations for contracts from December 2020.

 

If you have any questions about your general conditions and / or the above stipulations, do not hesitate to contact us (or +32 16 74 52 00 or sales@tcm.be).

 

Sources

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Don’t wait another second – collect your money

Focus on your business, we’ll take care of your outstanding payments. Contact us to find out more.

Contact us