New Book 5. ‘Obligations’ in the Civil Code

The Civil Code is being modernised. Book 5 'Obligations' of the new Civil Code was published on 1 July 2022. What are the key take-aways of that new book?

Conflict of interest for terms and conditions

According to the new book, all terms and conditions of a contract apply, with the exception of those that are incompatible. This means that from now on a contract will also exist if it contains contradictory provisions, but those contradictory provisions will have no effect.

If you find certain clauses in your general terms and conditions that important that you would rather not conclude an agreement than to drop those clauses, you must explicitly state this. Preferably before concluding the agreement. After all, a provision in your general terms and conditions stating that in the event of conflicting terms the agreement was not validly agreed, will have no effect.

Pre-contractual liability

If the negotiations fail, one party may owe the other party compensation under the new Book 5 of the Civil Code. Such compensation is particularly possible in the event of unlawful termination of the negotiations. The affected party can claim compensation for the costs incurred, for example for the costs of a due diligence or the preparation of the draft contracts.

And it can go even further: if a party could legitimately trust that the contract would be concluded, that party could claim damages equal to the net benefits that the contract would bring to them.

Wrongful terms

Another novelty concerns the non-negotiable terms which create an apparent imbalance. Such wrongful terms are considered unwritten.

Attention: also in the Economic Law Code (ELC) there is a regulation for unlawful clauses, but then only for B2C (Business to Consumer) and some B2B (business to business) situations. This therefore concerns unlawful clauses that do not fall under the ELC.

The Imprevision Doctrine

One of the most important novelties, however, is the introduction of the improvisation theory. This allows a party to be released from compliance with the agreement if new (unforeseen) circumstances make its implementation virtually impossible. A typical example is the payment of rent by a trader who has to close his business due to the pandemic. This imprevision doctrine did not exist in Belgian law. This has already been explicitly confirmed by case law, and more specifically by the Court of Cassation.

But that will change in the future: the new provision gives the debtor facing an unexpected situation the opportunity to request a renegotiation.
If the renegotiations fail, the debtor can ask the court to amend or even terminate the contract.

It should be clear that this will only be possible in very exceptional situations.
The parties can even determine that the imprevision doctrine will not apply to their agreement.

Damages

The new Book 5 no longer talks about penalty clauses, but about damages clauses. The general terms and conditions may provide for a compensation clause if one of the parties is at fault. The court can reduce a compensation that is included in a clause but is ‘clearly unreasonable'.

Liberation clauses

The new Civil Code also confirms that liberation clauses are valid.
It does add, however, that the debtor cannot free himself from his willful fault or from the willful fault of a person for whom he is responsible. Nor can he free himself from his own faults or from the faults of a person for whom he is responsible when that fault affects the life or physical integrity of a person.

Conversely, the debtor's employees can now invoke the release clauses included in the contract between the debtor and his creditor.

1 January 2023

Although the new Book 5 was already published on 1 July 2022, it will only be applicable from 1 January 2023. Contracts entered into before 1 January 2023 thus remain subject to the former law. Only contracts concluded on or after 1 January 2023 are subject to the new provisions of Book 5. Discussions about the execution of a contract, its payment or about the application of the imprevision doctrine must therefore be resolved depending on the date of the contract, and not dependent on when the disputed situation arises.