In practice, a quotation and its confirmation rarely refer to the same general terms and conditions: a main contractor will rely on its own general terms and conditions, while the subcontractor may invoke its own. The same issue arises in sales contracts and other types of agreements.
Since the entry into force of Book 5 of the Belgian Civil Code, the legislature has resolved this conflict. Article 5.23 enshrines the so-called “knock-out” rule: the contract is formed, but conflicting clauses cancel each other out.
1. The enforceability of general terms and conditions
Article 5.23, first paragraph, of the Belgian Civil Code makes the incorporation of a party’s general terms and conditions into the contract subject to two requirements: the other party must have actually been aware of them or, at the very least, have had the opportunity to take actual notice of them, and must have accepted them.
This gives rise to several practical consequences:
- A mere reference to terms and conditions that the customer can obtain only upon request or must consult elsewhere will generally not be sufficient to make them enforceable against that customer.
- In a long-standing commercial relationship in which repeated reference has consistently been made to the same terms and conditions, however, such a reference may be sufficient.
- Individually negotiated terms take precedence over general terms and conditions (Article 5.23, second paragraph).
- Terms and conditions mentioned for the first time on the reverse of an invoice generally come too late: the contract has already been concluded by then.
This does not mean that the invoice has no legal consequences. Under Article 8.11, § 4, of the Belgian Civil Code, an invoice accepted by a business or not disputed within a reasonable period constitutes, unless proven otherwise, evidence against that business of the legal transaction referred to in the invoice. This is a rebuttable presumption: a party that fails to respond to an invoice containing a penalty clause or a jurisdiction clause that does not correspond to the agreement reached may therefore find that clause being enforced against it.
2. The knock-out rule
Where a quotation and its acceptance refer to different general terms and conditions, Article 5.23, third paragraph, of the Belgian Civil Code provides that the contract is nevertheless formed. Each set of general terms and conditions then forms part of the contract, with the exception of any conflicting clauses.
Conflicting clauses are therefore excluded and replaced by the applicable default rules of law, while compatible clauses remain in force. Before the reform, case law vacillated between different approaches: giving precedence to the first set of terms, the last set of terms, or mutually cancelling out the conflicting terms.
The law has removed this uncertainty for contracts concluded on or after 1 January 2023. Earlier contracts, including subsequent amendments, remain in principle subject to the former law, unless the parties agree to apply Book 5.
A clause giving the seller’s terms and conditions “precedence” over those of the buyer does not, incidentally, change any of the above.
3. The only way out: an express declaration
Article 5.23, fourth paragraph, of the Belgian Civil Code provides for an exception: no contract is formed if one party expressly states, either in advance or without undue delay after receiving the acceptance, and other than through its general terms and conditions, that it does not wish to be bound by such a contract.
The declaration must therefore be separate from the general terms and conditions: a standard clause is not sufficient, and the declaration must be made without delay.
However, this weapon cuts both ways. The absence of a contract does not prevent the parties from beginning performance. Any performance already rendered will then have to be unwound by other means, creating legal uncertainty that few businesses wish to face.
4. What the company risks losing
Where a clause in the general terms and conditions is thus excluded, the general rules of law apply.
In practical terms, this may mean:
- Without a penalty clause or a fixed contractual damages clause, the seller must be satisfied with statutory default interest and must prove any additional loss.
- Without a retention-of-title clause, the seller risks being merely an unsecured creditor if its customer becomes insolvent and may no longer be able to reclaim the goods delivered.
- Without a jurisdiction clause, the rules of the Belgian Judicial Code determine which court has jurisdiction, sometimes a considerable distance from the seller’s registered office.
- Without a limitation of liability, the seller is in principle liable to compensate the full extent of the damage.
Furthermore, any clauses that remain in force are still subject to scrutiny under the rules governing unfair terms between businesses (Articles VI.91/3 to VI.91/5 of the Belgian Code of Economic Law), which sanction clauses that create a manifest imbalance between the parties’ rights and obligations.
5. Key precautions before sending a quotation
The battle over general terms and conditions is decided before a dispute arises. Several practical steps and considerations are therefore essential:
- Include the general terms and conditions in the quotation itself and actually attach them. For electronic quotations, provide for express acceptance, for example by means of a tick box.
- Incorporate the essential clauses into the body of the quotation or into specific terms and conditions, or even negotiate them individually, since negotiated terms take precedence.
- Respond in writing to the order confirmation as soon as the customer refers to its own terms and conditions.
- If you do not wish to enter into a contract on the basis of the other party’s terms and conditions, expressly state this outside the general terms and conditions and without delay.
- Promptly dispute in writing any invoice or clause that does not correspond to the agreement reached.
- Have your general terms and conditions and quotation process reviewed in advance.
Thanks to its continuously updated expertise in developments in legislation and legal practice, Vanbelle Law Boutique assists companies in drafting and reviewing their general terms and conditions and quotations, and in defending their interests before the courts in contractual disputes.
