Temporal Discrepancy in the Scope of Application Between Book 5 Contracts and the B2B Law
20 June 2023
The B2B Law and its Temporal Scope
The B2B Law has already become well-established in our legal landscape. The principles are known: in contractual relationships between businesses, there are (1) a list of 4 black clauses that are deemed unfair in any case, and (2) a list of 8 grey clauses presumed to be unfair. Additionally, a general assessment standard has been introduced, sanctioning an apparent imbalance in a clause with its nullity (Article VI. 91/3 BCE).
The B2B Law has been in effect since December 1, 2020, applying not only to agreements made from that date but also to existing agreements that are renewed or modified. The silent extension of an agreement qualifies as a modification. This is all familiar territory.
The difference in the temporal application of the B2B Law and Book 5 “Obligations”
Things get more interesting when comparing the provisions regarding the entry into force of the B2B Law with those of Book 5 “Obligations Law,” which applies to all legal acts and agreements concluded from January 1, 2023.
Renewing an agreement after January 1, 2023, results in both the B2B Law and the provisions of Book 5 “Obligations Law” applying. Both regimes run concurrently.
However, if an agreement is (implicitly) extended after January 1, 2023, the B2B Law applies, while the provisions of Book 5 “Obligations Law” do not.
This is a consequence of the fact that the B2B Law, as a special law, takes precedence over the general rule stated in Book 5 “Obligations Law.”
In general: the stakes of the difference
As a result, a business allowing an extension of an agreement must consider that the B2B Law will apply, and it won’t be able to invoke the provisions of Book 5 “Obligations Law.” This can impact the assessment of whether a clause qualifies under the general assessment standard and is thus apparently imbalanced (Article VI. 91/3 BCE).
There will be a discrepancy in this assessment between (1) the situation where a business allows an extension of the agreement from January 1, 2023, and (2) the situation where the agreement is renewed from January 1, 2023. This is explained below using an example.
Force majeure: an example illustrating the stakes of the difference
Book 5 “Obligations Law” includes a force majeure provision in Article 5.74 BW. Essentially, this provision doesn’t need to be included in an agreement. Once the conditions of Article 5.74 BW are met, a business-debtor can invoke the force majeure doctrine. Parties can modulate, facilitate, tighten, or even exclude the legal force majeure provision in an agreement.
Under the old Civil Code, the application of a force majeure provision was only possible if the parties had included a force majeure clause in the agreement. This is valid unless it would be apparently imbalanced due to the application of the B2B Law. This is a factual assessment made based on 7 parameters:
- All circumstances surrounding the conclusion of the agreement.
- The general economy of the agreement.
- The applicable trade usages and the normally applicable common law.
- All other clauses of the agreement.
- All other clauses of another agreement on which it depends.
- The nature of the products covered by the agreement.
- The clarity and comprehensibility of the clause.
The term “apparently” means that no normal reasonable and foreseeing person in the same circumstances would have included the clause in question.
This assessment must be made at the time of concluding the agreement.
Application in case of an agreement extended after January 1, 2023
When a business-debtor allows an extension of a fixed-term agreement, the assessment of an apparently imbalanced force majeure clause will not take into account Book 5 “Obligations Law.”
To the extent that the assessment of an apparently imbalanced force majeure clause also takes into account the nature, severity, and importance of a contractual deviation compared to the applicable common law, this assessment will be made, among others, based on the old Civil Code, which does not provide for any force majeure provision (read above).
Although it can be argued that a force majeure clause under the old Civil Code is generally valid, it risks, considering a lack of legal regulation, combined with the type of contract and other contractual provisions, falling under the purview of the general assessment standard (Article VI. 91/3 BCE), for example, when:
- The agreement is an adhesion contract.
- The agreement is entered into at a fixed price, while the economic sector within which it is concluded is not known to be volatile, and a force majeure clause is not customary.
- The agreement includes a force majeure clause that closely aligns with the conditions provided in the force majeure clause.
- Only the business-debtor can invoke the force majeure clause.
- The business-creditor cannot invoke any form of force majeure or external cause.
- A limitation of the liability of the business-debtor to the amount of the originally agreed price is included without taking into account any potential price increase due to the application of the force majeure clause.
Application in case of an agreement renewed after January 1, 2023
When an agreement is renewed after January 1, 2023, Book 5 “Obligations Law” will be taken into account because this creates a new contract (Article 5.78, paragraph 3 BW).
The legal framework as included in Book 5 “Obligations Law” certainly makes it more difficult to qualify a contractual clause deviating from the force majeure provision as apparently imbalanced. Book 5 “Obligations Law” allows deviations, and only an “apparent” imbalance is sanctioned by the B2B Law. A force majeure clause that fully corresponds to Article 5.74 BW in this scenario seems, at least considering the provided legal framework, not to qualify as apparently imbalanced.
A business that incorporates a force majeure clause from the agreement into the renewed agreement will thus enjoy broad protection against the general assessment standard of the B2B Law (Article VI. 91/3 BCE), at least compared to an extension of the agreement.
The discrepancy between the entry into force of Book 5 “Obligations” and the B2B Law means that businesses, in view of their own interests, must consider whether, after January 1, 2023, they opt for an extension or a renewal of an existing agreement under the same conditions.
Even if the B2B Law already applied to an existing agreement, the renewal or extension of this agreement will determine the application of Book 5 “Obligations Law.” To the extent that Book 5 “Obligations Law” introduces some provisions that are not found in the old Civil Code (for example, the force majeure doctrine), this will certainly influence the assessment of the general assessment standard as provided in the B2B Law (Article VI.91/3 BCE). A business, therefore, should think twice before allowing or entering into an extension or renewal of an agreement after January 1, 2023.