Is my cancellation clause robust?

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Fauve Bex

Associate

Service providers generally provide for a cancellation clause in their contracts or general conditions. During the coronavirus crisis such clauses are now being tested. So, are such clauses enforceable?

In a B2B relationship, the parties are free to agree on the consequences of a cancellation or about the events that might affect the performance of their obligations. In this context a clause in which the customer is not entitled to a refund when cancelling the agreement is perfectly valid and enforceable. Depending on the way the cancellation policy is drafted, questions about whether the coronavirus crisis results in force majeure might even be irrelevant.

This could change as a result of the entry into force of the new legislation on unfair terms in B2B contracts (which is foreseen on 1 December 2020). Under this new law, clauses creating an obvious imbalance between the rights and obligations of the parties will be considered to be unfair. A clause placing, without compensation, the economic risk on a party, while such risk would normally fall on the other party, could be problematic.

In a B2C relationship, the freedom to contract has been limited to protect the consumer. For example, a clause in which the consumer, unless he or she pays compensation, is prevented from cancelling the agreement in the event of force majeure, is unlawful and will not be enforceable. A combination of clauses or conditions giving the same result is equally unlawful.

To be protected by this rule, the consumer should demonstrate the presence of a force majeure situation. He or she should basically be facing an event beyond his or her control that makes the performance of his or her obligations (reasonably) impossible. This will depend on the actual circumstances and might not always be easy. In the event that the consumer cannot perform his/her obligations under the agreement due to a ban set by the authorities, then the consumer will be protected. However, in many other cases one could question whether the consumer is actually prevented from performing a contract or just being (overly) careful.

Do not hesitate to contact Fauve Bex, Charlotte Vermeersch or Alexander Hansebout for further information.

The above information is merely intended as comment on relevant issues of Belgian law and is not intended as legal advice. Before taking action or relying on the comments and the information given, please seek specific advice on the matters that are of concern to you.

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