The battle of forms: how to enforce your general terms and conditions?
Most companies have a set of general terms and conditions to fall back on in their business relations. Does this mean that, for example, if there are problems with payment or delivery, everything is also regulated according to these own general terms and conditions? In commercial relationships, general terms and conditions are often sent from both sides; which conditions then apply? In this article we will provide you with a number of main points.
The applicability of your general terms and conditions
For general terms and conditions to apply in the relationship with a co-contractor, a double condition must be met. Firstly, the other party must have had the reasonable opportunity to take note of the general terms and conditions prior to concluding the contract. A (proof of) actual knowledge is not required. This means that the conditions must be sent along with the offer to contract, for example with an offer, and thus in principle before the contract is concluded. Secondly, the other party must have accepted the general terms and conditions either explicitly or tacitly. In certain cases, tacit acceptance of general terms and conditions can be inferred from the performance of the contract, for example.
Conflict between general terms and conditions
What if no clear agreement has been reached on the applicable general conditions and both parties are convinced that the contract has been concluded on the basis of their own general conditions, the so-called battle of forms? For example, if an offer (in which the general (sales) conditions were communicated) is accepted, but at the time of acceptance, reference is made to the party’s own general (purchase) conditions, which undoubtedly contain incompatible provisions.
Case law generally applies the knock-out rule in this case: in principle, the general terms and conditions of both parties apply, but only to the points on which they do not contradict each other. The points which are not contractually regulated as a result are then covered by the standard legal regulation on purchase, hire, contracting, etc. The draft of Book 5: Obligations of the new Civil Code, which was submitted as a bill in February 2021, also opts for this rule. Please note: this concerns Belgian law; other rules may apply to agreements with foreign parties.
A special case is when the general terms and conditions appear for the first time on an invoice, without there already being a contractual agreement on them. After all, the evidential value of an accepted invoice against a company also extends to the general terms and conditions that appear on it. The absence of a timely protest therefore results in both the invoice and these general terms and conditions being deemed accepted in principle. Even if the invoice is correct, it may still be necessary to protest the terms and conditions stated on it.
The B2B Act: a point of attention for general terms and conditions
A standard clause in the general terms and conditions which always declares the own terms and conditions applicable to the exclusion of the other party’s terms and conditions does not offer a solution. Based on the B2B Act, which entered into force on 1 December 2020, such terms which irrefutably stipulate the knowledge or acceptance of general terms and conditions – without the other party having been able to take note of them before concluding the contract – are null and void. The B2B Act also generally imposes a number of restrictions on contractual arrangements that are too one-sided, thus including general terms and conditions.
A lot of discussion is possible about the applicable general terms and conditions, so it is important to make clear (framework) agreements on this with the other party and/or to be alert to attempts by the other party to introduce general terms and conditions into the commercial relationship. In addition, it is good practice to have one’s own general terms and conditions checked from time to time against the evolving legislation.
Florence Fryges en Bruno Thoen
De Langhe Advocaten