The new law of obligations: what you should know
On 1 January 2023, Books 1 (General provisions) and 5 (Obligations) of the new civil code will enter into force. As a result, the legislation will, among other things, create a new balance between the contractual autonomy of the parties, on the one hand, and the judge’s role as guardian of the interests of the weaker contracting party, as well as the public interest, on the other.
We would like to list some important points for you:
- If a party wrongfully aborts the negotiations, it is extra-contractually liable towards the other party. If, moreover, on the part of the other party, it has created the legitimate expectation that the contract would undoubtedly be concluded, it can be held liable for the negative (the costs incurred), but also for the positive contract interest (the expected net benefits from the unconcluded contract).
- The so-called “knock-out rule.” If offer and acceptance refer to different general terms and conditions, a contract is established. Both general terms and conditions form part of the contract, except for the contradicting clauses.
This shall, however, not be the case if a party expressly indicated prior or without undue delay, after receipt of the acceptance, that it does not wish to be bound by them.
- Any clause, which could not be negotiated and creates a manifest imbalance between the parties’ rights and obligations, is illegal and will be considered unwritten. This particularly applies to consumers (C2C), for which there were no special rules to date. The provision would in principle also apply to contracts concluded with public authorities.
- A damage clause may, in addition to payment of a lump sum, also relate to the delivery of a specific service. The judge will moderate the clause if manifestly unreasonable. The judge will consider the damage and all other circumstances. The judge can, however, never order the debtor to pay less than a reasonable amount or performance.
- The so-called “circumstantial abuse” as an additional vitiated consent. This occurs if one party takes advantage of circumstances related to the weak position of the other party, resulting in a manifest imbalance of performances. The weaker party can, if necessary, claim an adaptation of its obligations and, insofar as the abuse is decisive, the annulment of the contract.
The said circumstances may (according to the explanatory memorandum) also result from economic or functional superiority, for example by a party in a monopoly or dominant position.
- Auxiliaries relied upon by the (principal) debtor may rely on the exemption clauses contained therein with respect to the (principal) creditor under the (principal) contract.
- An exemption clause may release the debtor or a person for whom he is responsible from serious misconduct, but not from willful misconduct. The exemption clause may, however, not rob the contract of its purpose.
- In the event of non-performance, the affected party may, to the extent that the conditions are met, by written notice and at its own risk, impose sanctions, including the dissolution of the contract, as well as the replacement of the debtor by a third party.
The contracting party may moreover, if appropriate, implement a price reduction in proportion to the difference in value between the received and agreed performance.
- The so-called “anticipatory breach.” The creditor may, subject to written notice, suspend the performance of his own obligation when it appears that the debtor will certainly not perform his obligation in time and the consequences are sufficiently serious for the creditor. This applies until the debtor provides sufficient guarantees for the proper performance of its obligation. The creditor may thus suspend its own obligation even though the debtor’s performance is not yet due.
In addition, the creditor may, subject to written notice, dissolve the contract in exceptional circumstances if, notwithstanding a reminder to provide sufficient guarantees for the proper performance of his obligation within a reasonable time, the debtor will certainly not perform his obligation in time and the consequences are sufficiently serious for the creditor.
- The so-called “hardship theory.” Unless otherwise agreed by the parties, in the event of unforeseeable circumstances beyond his control that render the performance of the contract excessively onerous so that it can no longer reasonably be expected to carry out the contract, a contracting party may ask the other party to renegotiate the contract with a view to modifying or terminating it.
In the absence of agreement between the parties within a reasonable period, the judge may, at the request of the most diligent party, modify the contract or terminate the contract in whole or in part.
As mentioned above, the new obligations law will enter into force on 1 January 2023. It will, however, only apply to contracts concluded after its entry into force. Contracts concluded before it, as well as future consequences arising from it, remain in principle subject to the old obligations law. The jurisprudence, however (according to the explanatory memorandum) is in certain cases free to already take the new obligations law into account.
The new obligations law deserves your special attention. After all, it has a very broad application and applies to all types of contracts (C2C, B2C and B2B, but also contracts with government authorities, etc.).
Many provisions can be expressly excluded or modulated according to your specific needs. It is therefore not a luxury to check the exact impact on your (standard) contacts and/or general terms and conditions, especially in view of other recent legislative initiatives that have a profound impact on the contractual field (notably the so-called B2B-act and the amendments to the act on combating late payment in commercial transactions). Please do not hesitate to contact us for a “check-up".