As part of a more general modernisation of civil law, the Belgian Parliament adopted the new Book 5 of the Civil Code containing the legal provisions on general Belgian contract law.
Book 5 will apply to contracts entered into as of 1 January 2023. The “old” contract law shall continue to apply to any agreements entered into before such time, unless parties prefer to submit them as well to the new provisions. The “old” and “new” contract law will as such co-exist for some time and seemingly identical contractual relationships may have different effects as a result.
Book 5 reflects the legislator’s aim to increase legal certainty by codifying important principles of Belgian contract law developed over the years by case law and legal doctrine. At the same time, Belgian contract law is modernized by the legislative recognition of certain legal principles aiming at protecting weaker parties.
While contractual freedom and the rule that agreements must be kept ("pacta sunt servanda") remain cornerstones of Belgian contract law, Book 5 includes some limitations to such freedom or its negative effects, if deemed excessive, and introduces certain novelties.
Some noteworthy changes are the following:
1. Introduction of a “hardship” principle
Under Book 5, a party shall be entitled to request the revision of a contract if its execution becomes excessively burdensome due to unforeseeable circumstances beyond the control of that party. Protection against hardship becomes as such the rule, unless it has been excluded by law or contract. This is in contrast to the current Belgian legislation where obligors must provide for explicit contractual protection to deal with any adverse consequences of unforeseeable circumstances.
2. Imposing contract terms on counterparties becomes more as ever a balancing act
The existing legislation prohibiting certain clauses in B2B and B2C agreements, is complemented by a general legal provision providing that unfair clauses can have no legal effect. Unfair clauses are clauses that cannot be negotiated and create a clear imbalance between the rights and obligations of parties. In addition, under Book 5, an “abuse of circumstances” can lead to the nullity or to the alteration of a contract.
3. Unilateral rights in case of breach of contract
The right for a party to take unilateral (and sometimes even pre-emptive) action, without prior court intervention, when suffering from a breach of contract, is explicitly recognised. Book 5 provides that, upon a party’s default, the counterparty has the right to unilaterally terminate the contract and have the works performed by a third party at the cost of the defaulting party.
4. Statutory regime on transfer of debts and transfer of contracts
The new Book 5 provides, for the first time in Belgian Civil Law, in statutory mechanisms for a transfer of contract.
5. Battle of Forms
Book 5 introduces the so-called “knock-out”-rule to deal with conflicting general conditions and contract terms.
We will organise a client seminar on Thursday 15 December which will focus on Book 5 and its impact on specific sectors. In all industries, market practitioners will indeed need to consider carefully whether their negotiated positions are indeed as solid as written and not susceptible to being nullified, set aside or tempered considering the context in which negotiations took place.
During small-group deep dive sessions, we will focus on the practical consequences of the reform and will reflect on the scope of certain novelties set out in the new Book 5, with the aim to help you fully grasp the potential of the new provisions and to support you in defining your future negotiation strategies.
If you wish to participate to this seminar, you can reach out to your Loyens & Loeff contact or send an email to email@example.com.