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Battle of the forms: knock-out rule is crowned the winner by the new Belgian contract law.

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Stephanie Pellens & Laura Van Gompel – 22/8/2022 – Often companies use their general terms and conditions as basis for commercial and contractual negotiations. When for example supplier and client get to an agreement, it is possible that they both refer to their own general terms. In this case, discussion rises on which agreement and/or general terms and conditions apply.

New article 5.23 of the Belgian Civil Code (CC) offers the solution to this so called “battle of the forms”.

Article 5.23 CC takes the specific arrangements negotiated by the parties as a starting point. In case these specific arrangements derive from one party’s general terms and conditions, the former will prevail. This makes sense: a tailor made deal has priority over standard clauses. 

How do we proceed however when parties have made reference to different sets of general terms and conditions? For example, the supplier sends a price quotation to the client where he refers to his own sales conditions. On the other hand, the client accepts the price quotation by e-mail. In the e-mail disclaimer is stated that all transactions of the client will be ruled by his purchase terms. The sales conditions and purchase terms establish different rules on payment.

According to new article 5.23 CC the contract between supplier and client shall be lawfully concluded and both sets of terms will apply. Only the contradicting provisions of both terms and conditions – in the example payment terms – are not applicable. The Belgian legislator thus assumes that parties did have the common intention to close the deal, despite their contradicting general terms. This is called the “knock-out rule”.

Suppletive contract law shall do as a safety net for the parties and fill in the possible gaps due to not applicable deriving general terms.

It is none the less possible that one of the parties in our example wishes not to contract under these circumstances.

The mere fact that parties handle contradicting terms and conditions is not a sufficient reason to allege the non-existence of the contract. In this case, the party who does not wish to be bound by the deal, will have to indicate this explicitly, as soon as possible. The supplier, in our example, should inform the client that he will not go through with this deal, as soon as he receives the acceptation e-mail with the disclaimer.

You do best to include a very clear applicability scope in your own general terms and conditions. And even so, caution is advised for companies (and their sales departments!). Always double check whether or not business partners include (any reference to) general terms and conditions, that might find their (silent) way into your commercial relation.

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