It is key for a business to have well drafted general terms and conditions. Clear general terms and conditions avoid systematic negotiations of contractual clauses with counterparts.
What are the main clauses you should not forget in your general terms and conditions?
It is not possible to cover all the different types of clauses contained in general terms and conditions, so we analyse the main ones.
First of all, the exemption or limitation of liability clause. This clause is very common and allows for example to exclude indirect or unforeseeable damages. In other words, organisations anticipate a breach in a contract and are setting limitations to their liability.
Then, the penalty clause, which foresees that in case of a late payment the client has to pay an additional amount (for instance 10% of the principal amount).
The clause defining the applicable law is also very important. If you have, for example, a contract between a Chinese and a Belgian company, the Belgian company will have an interest in foreseeing the application of the Belgian law.
It is also essential to include a choice of jurisdiction to make sure that, even though the performance of the contract is taking place abroad, the Belgian courts will remain competent in case of litigation.
When are the general terms and conditions binding upon the other party?
First, the general terms and conditions have to be made available to the counterpart so that the counterpart has the opportunity to read them before the contract is concluded. The general terms are accepted when the counterpart signs the agreement or, in business matters, if it does not express protest (the absence of response from the counterpart being considered as an acceptance).
In a digital transactions, the general terms and conditions must be available for the client (for example through a link) so that he/she has the opportunity to read them and then to accept them by clicking on an « I agree » or similar button.
Could your general terms and conditions be “unfair”?
Since a low of April 4th 2019, Belgium has introduced new rules on unfair contract terms in B2B relations. Unfair terms create an obvious imbalance between both parties’ rights.
For instance, if that the general terms and conditions state that the editing party is the sole party allowed to define all clauses of the contract, such a clause would be null for being considered as unfair.
Another example would be a limitation of liability to a very low amount (for example 500€ while the price of the contract is set at 1 000 000€). In this case, the clause will also be null because of the imbalance between the liability and the price of the contract.
Do not hesitate to contact a lawyer in order to help you draft or review your own general terms and conditions and to make sure that they are compliant with the new laws and regulations.
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