20 June 2023

Taking matters into your own hands in contract disputes?

The new Belgian law of obligations offers several possibilities to enforce contract claims more efficiently. Whereas previously one often still had to go to court to have shortcomings of a co-contractor sanctioned, for new contracts concluded after 1 January 2023 one will be able to do this autonomously. In this article, we provide an overview of the possibilities to do so and of their conditions.

Dissolution and annulment

One of the possible sanctions if the co-contractor fails to honour his commitments is the dissolution of the contract (possibly with additional compensation). Previously, the parties could already exclude the mandatory prior intervention of the court by means of an “express resolutive clause”. Now, even without such a clause, one will be able to dissolve the contract oneself, i.e. via a unilateral written notification stating the alleged breach. This is provided that (1) the breach is serious, (2) prior notice of default has been given and (3) one has taken useful measures to gather evidence of the breach. A “resolutive clause” is therefore no longer necessary to be able to dissolve a contract out of court, but can still be useful as a framework (e.g. not requiring a notice of default, giving examples of serious shortcomings, imposing the formality of a registered letter, etc.).

Analogous to unilateral dissolution (sanctioning a breach of contract), one can now also unilaterally declare a (non-notarial) contract null and void (thus sanctioning an invalid conclusion of the contract).

Anticipatory breach

While the possibility of unilateral dissolution already followed from recent case law by the Court of Cassation, the legislator has also provided for a real novelty: it is no longer necessary that the obligation is already due and payable in order to be able to dissolve the contract (or have it dissolved) for future breach of that obligation. Because of the far-reaching nature of such “anticipatory dissolution”, strict conditions apply: (1) exceptional circumstances, (2) clarity that the debtor, after having been summoned to provide sufficient guarantees for proper performance within a reasonable period of time, will not perform its obligations in time and (3) sufficiently serious consequences of the non-performance for the creditor.

Replacement of the debtor

If a co-contractor does not fulfil his obligations, one can also choose to have the obligation performed by a third party at the co-contractor’s expense. As in the case of dissolution, the prior intervention of the court could previously already be excluded by a contract clause. Now, however, such a clause is no longer needed, provided that the following conditions are met: (1) exceptional circumstances (e.g. urgency), (2) a notice of default granting a reasonable remediation period has not been complied with, (3) the prior (impartial) gathering of evidence of the breach and (4) a written notice stating the reasons of the replacement.

Price reduction

Finally, there is the new sanction of price reduction. If one’s co-contractor does not properly fulfil his obligations, but this non-performance is not sufficiently serious to justify dissolution, one can now unilaterally apply a proportional price reduction. To this end, a written notice stating the reasons of the price reduction is required.

Supplementary law and judicial review

The above unilateral sanctions are “supplementary law”: one can contractually adjust or even exclude them. Given the far-reaching nature of these sanctions, a clear contractual arrangement is very important in new contracts concluded after 1 January 2023. Indeed, failing this, one’s co-contractor will be able to invoke these sanctions at its own discretion, after which one would have to initiate legal proceedings if one believes this was unjustified. Conversely, a contractual arrangement also gives more certainty if one wants to apply a sanction. Indeed, with all unilateral sanctions, the court can still check afterwards whether their conditions (statutory or contractual) were met and whether their application was not abusive.

Bruno Thoen and Wibo Van Poeck
De Langhe Attorneys

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