The (hefty) price of cancellation for entrepreneurs: the risks of unforeseen ‘small print’

A recent ruling of the Antwerp Commercial Court reminds entrepreneurs that general terms and conditions can become applicable without them realizing. Furthermore, the Commercial Court ruled that a cancellation fee of (more than) 100% may not be standard practice, but is not per se unlawful.

Introduction

In the case at hand, an exhibitor cancelled its participation in a trade fair. On the basis of the general terms and conditions, the trade fair organiser claimed a cancellation fee for the full stand price plus 1 000 EUR. The exhibitor, in turn, argued with two key arguments: (i) the general terms and conditions do not apply because the confirmation button did not refer to the general terms and conditions (or their location); and (ii) the cancellation fee is an excessive penalty clause or an unlawful B2B clause.

Unforeseen application of the general terms and conditions

For general terms and conditions to apply, a contracting party must have had the opportunity (at the time of conclusion of the contract) to familiarise him/herself with the terms and conditions and accept them, either expressly or implicitly. The trade fair exhibitor does not deny signing the electronic registration form for the trade fair. However, while the registration form stated that the exhibitor had read and accepted the general terms and conditions, there was no explicit reference to where these could be found. The exhibitor therefore argued that the general terms and conditions could not apply.

The Commercial Court did not agree with this reasoning and ruled that the general terms and conditions were enforceable, since the signing of the registration form triggered a factual presumption that the exhibitor could have taken note of the general terms and conditions and had accepted them. This is a somewhat strange consideration, since a clause stipulating notice and acceptance of contractual provisions without the other party actually being able to consult them, is deemed unlawful. However, the fact that the exhibitor had previously participated in the trade fair and was therefore familiar with the general terms and conditions, makes this plausible.

A cancellation fee of over 100%: not standard practice, but not necessarily prohibited

In accordance with the general terms and conditions, the trade fair organiser claimed compensation for the full price, plus a fixed compensation of 1 000 EUR, due to cancellation less than 30 days before the trade fair. The exhibitor contested these fees, arguing that the cancellation clause (i) actually constituted an excessive penalty clause and should be mitigated; (ii) was unlawful in a B2B context due to an apparent imbalance; and (iii) constituted an abuse of law.

The Commercial Court rejected this reasoning once again, ruling that while a cancellation fee of 100% may not be standard practice, this does not make it unusual or unlawful. After all, it would be difficult for the trade fair organiser to replace the exhibitor at such short notice.

How we can help you

As a law firm specialising in commercial law, we protect your business interests by:

• making your general terms and conditions legally sound and commercially viable; and
• mitigating the risk of invalid or unlawful clauses (such as cancellation or penalty clauses).

Would you like to have your general terms and conditions reviewed, or do you have a specific dispute relating to cancellation or termination fees? Feel free to reach out for an initial meeting. As commercial lawyers, we always consider the legal and commercial impact for your business.

Pieter-Jan Aerts
De Langhe Attorneys