A term in general terms and conditions is voidable if it is unreasonably onerous for the other party in view of the nature and other contents of the agreement, the manner in which the terms and conditions were concluded, the mutually recognisable interests of the parties and the other circumstances of the case (Article 6:233 Dutch Civil Code, introductory words and (a) of the Dutch Civil Code). The circumstances that are relevant for the application of Article 6:233, introductory words and (a) of the Dutch Civil Code include the capacity of the parties, their social position, their mutual relationship and their expertise.
Grey list under Dutch law
For contracts with a counterparty who is a natural person not acting in the exercise of a profession or business (hereinafter: a consumer), the law contains a list of clauses that are deemed to be unreasonably onerous (the ‘black list’ of Section 6:236 of the Dutch Civil Code) and a list of clauses that are presumed to be unreasonably onerous (the ‘grey list’ of Section 6:237 of the Dutch Civil Code).
Although the black and grey lists relate to contracts with consumers, even if the other party is not a consumer, it may be relevant that a clause in standard terms appears on one of these lists when assessing whether this clause is unreasonably onerous for the other party. In the parliamentary history, in connection with the limitation of the black and grey lists to contracts with a consumer, it was noted that if a small legal entity, which is not materially different from a consumer, is confronted with a clause on the black or grey list, a reflex effect via the open standard of Section 6:233 introductory words and under a of the Dutch Civil Code is obvious.
It is to be considered that legal entities that do not exercise a profession or business, a reflex effect is also possible in other cases, for example where the other party has entered into a contract in the exercise of its profession or business, but this contract does not relate to the actual profession or business. Thus, there may be cases where the other party is not a consumer but is in a situation very similar to that of a consumer. In such cases, the fact that the clause appears on the black or grey list may be taken into account in assessing whether the clause is unreasonably onerous for that other party.
Expanding the Scope of Reflex Effects on Black and Grey Lists in B2B Agreements
Why is this Supreme Court Ruling Important?
On September 8, 2023, the Supreme Court of the Netherlands issued a groundbreaking ruling on the reflex effect on general terms and conditions of business under Dutch law. It concerned the applicability of general terms and conditions in a business-to-business (B2B) context, specifically the reflexwerking of black and grey lists. This article by MAAK Advocaten dives deep into the implications of this ruling for businesses and their contractual relationships.
What are General Terms and Conditions?
General terms and conditions, often referred to as “the fine print,” set the standard conditions under which a commercial party wishes to enter into an agreement. These conditions are generally accepted more easily than the terms in a ‘regular’ contract. The law does not require proving that the counterparty has read and understood these terms. Instead, the party issuing the terms merely needs to demonstrate their applicability.
How are Unfair Clauses in General Terms and Conditions Regulated?
For safeguarding against unfair clauses in general terms and conditions, Dutch law offers two avenues:
- Adequate Disclosure: The counterparty must have had the opportunity to review the terms before entering into an agreement.
- Reasonableness Test: A clause can be annulled if it is ‘unreasonably onerous,’ evaluated based on various criteria, such as the nature of the contract and mutual interests.
For consumer contracts, the law specifies black and grey lists. Clauses on the black list are inherently unfair, while those on the grey list are presumptively unfair but can be proven otherwise.
How has the Scope of Reflex Effects Changed?
The concept of reflexwerking allows businesses, in specific cases, to appeal to these black and grey lists to assess whether a clause is unreasonably onerous. This was traditionally limited to small businesses that resembled consumers in their dealings.
The recent Supreme Court ruling expands this scope. It applies reflexwerking even when an agreement does not relate to the core activities of a business. In this case, it involved a dairy company engaging an advisor for acquiring a subsidy, a transaction unrelated to its main business of dairy production.
What are the Practical Implications for Businesses?
- Greater Legal Security: This ruling offers greater protection for companies entering into contracts unrelated to their primary business activities.
- Due Diligence: Businesses must be more meticulous in drafting and accepting general terms and conditions.
- Legal Review: Companies may want to reassess their existing contracts to ensure they are not exposed to potential annulment or legal action based on this ruling.
What is the Impact on Contract Litigation under Dutch law?
This development can significantly affect contract litigation. The Court’s willingness to extend the scope of reflexwerking may lead to increased challenges to the enforceability of clauses in general terms and conditions, even in B2B settings.
