Protecting small businesses against abuse of dominant position
Starting December 1st, unlawful clauses in relation between companies can be declared void, even with regard to existing contracts that are renewed, extended or adapted.
1. As in the most of our surrounding countries, a new law was voted on the 4th of April.
As of 01.06.2020, main focus is placed on sanctioning abuse of dominant positions, which in some cases is being put by certain (bigger) companies on other companies (normally smaller ones).
As of 01.12.2020 certain unlawful contractual clauses can be declared void.
This legislation initiative was put into action pursuant to difficulties experienced by the agricultural sector against big distribution companies, subcontractors and suppliers of parts.
In this first aspect the focus is situated on abuse of position of economic independence and unlawful market practice. This legislation is already in use.
2. As of 01.12.2020 contractual clauses can be declared void and specific rules on interpretation of clauses will be applied.
This specific regulation will be applied for all contracts (buy, rent, contractor, settlement, commercial agency franchise,…), with a sole exception for those contracts concerning financial services, loans, insurance, investments, individual pensions and contracting with governments.
This regulation (for those rules belonging to public order) will also be applied in international context, even before a court in an other country. Can be thought of rules regarding excessive damages, rules regarding the exclusion of deceptive errors and clauses that exclude a certain notice period for indefinite obligations.
3. Regulations on transparency and interpretation.
- Clauses put in writing need tot be clear and comprehensive. One has to have the possibility to assume that the counterparty has agreed with full knowledge. An agreement in a foreign language does not mean that the transparency rule is breached, and although the law does not provide a specific sanction, can be assumed that such contracts are not clear and comprehensive, which can lead to an unlawful clause that can be declared void. It can also be seen as a non-contractual fault, which can lead to damages.
- There is an explicit reference to classic rules of interpretation (fe. Interpretation of clauses in advance of those who commit, or in a buy agreement against the seller). There is also stated that certain interpretations also can be made according to the market practice.
4. Unlawful and forbidden clauses.
A contractual clause can be unlawful and forbidden, when an apparent distinction is being made between the rights and obligations of the parties. A certain restraint is assumed, especially for core clauses. All the aspects know at the moment of closure of the agreement have to be taken into account, just like the general economy, the applicable market practice, the requirement of clear and comprehensive clauses.
A. There is a list of black clauses, which are forbidden in any circumstance:
- An irrevocable obligation of one party, whilst the performance of the obligation by the counterparty is dependent from that parties will (fr. “the orders accepted by our representatives are only binding after our written order confirmation”)
- one-sided interpretation clauses (fe. “when abnormal usage, we have the right to demand a guarantee”)
- Renunciation of every possible claim (fe “When discussion, party renounces every right to make a claim”)
- Irrefutable acceptance- or knowledge clauses (fe “every party is assumed to have had irrefutable knowledge of the general conditions). An announcement that the general conditions can be delivered at first request is not enough.
B. Second, there is a grey list of clauses which are assumed forbidden, but can be refuted when proven there is no apparent distinction between parties.
Those clauses are:
- One-sided possibilities to change the contract with regarding to price, amount, specifications of product, conditions,…)
- Clauses with regard to duration of the agreement, tacit renewal of extension and reasonable period of notice (such clauses are assumed forbidden, such as clauses that pose commitments on certain parties without giving them a reasonable period of notice). The text of the law does not mention that this type of clauses are only forbidden in indefinite agreements. There is an ongoing protest to apply this legislation to agreements that are definite in time.
- Contractual reverse of the economic risk without counter prestation (such as an obligation to take back certain products that are not beinh sold).
- Inappropriate contractual limitation or extinction of lawful rights with regard to contractual default (rights of execution, damage, dissolution, suspension,..) For example when strict prescription rules are applied or huge exclusion of liability, too spacious force majeure,…
- Certain clauses of exoneration:
- Exclusion of liability for intent or big default by the company
- Exclusion of liability for intent or big default by the companies representatives
- Exclusion of liability for non-execution of obligations by the firm.
- Clauses focused on limitation of means of prove.
- Excessive damage claims (can be reviewed by the court and deny the clause, recover (thus provide a lower damage)). Also a claim to cease and desist can be formed even in a class action.
Oct. 18, 2020, 9:48 a.m.