With the introduction of Book 5 “Obligations” of the new Civil Code starting Jan. 1, 2023, there will be some changes that may impact contracts entered into from that date.
First, after years of discussion in the case law on the “battle of the forms,” the legislature resolutely chooses to enshrine the “knockout” rule in accordance with the prevailing Supreme Court case law. Indeed, problems arose when both parties each tried to put forward their set of general terms and conditions leading up to the conclusion of a contract. In that case, are it the general terms and conditions of the party making the offer (“first-shot” rule), or is it the general terms and conditions of the party accepting the offer (“last-shot” rule) that will apply to the contract? Or both?
From Jan. 1, 2023, both the general terms and conditions of one party and the general terms and conditions of the other party will apply to the contract, at least to the extent that the provisions do not conflict with each other. In the latter case, the common law will prevail.
In doing so, the legislature intended to give effect to the original intention of the parties: specifically, to establish a contract.
If you still cannot agree with the application of common law, the new Book 5 states that a party may escape the formation of a contract by expressly indicating to the other party, prior to acceptance of an offer or without undue delay after acceptance, that he does not wish to be bound by the contract. Mind you, no agreement will then come into being at all. In other words, it is no longer possible to force your own terms and conditions on the other party, nor to have the other party force its terms and conditions on you.
In addition, the new Civil Code also provides for the automatic application of the imprevision doctrine to contracts.
The legislature starts from the principle that each party must fulfill its commitments, even if they have become more onerous or costly, or the other party’s consideration has decreased in value. But if some strict conditions are met, the debtor can still ask the creditor to renegotiate the contract.
Specifically, the legislature allows a request for negotiation when (1) the change of circumstances makes the performance of the contract excessively onerous and it would no longer be reasonable for the creditor to require its performance, (2) this change could not have been foreseen at the time the contract was entered into, (3) the change cannot be imputed to the creditor, (4) the creditor does not bear the risk, and (5) neither the contract nor the law excludes the application of this article.
Among other things, this provides opportunities to renegotiate the agreement in the context of the current issue of price increases.
Unlike the “knockout” rule, this provision is only of supplementary law. Specifically, this means that the legal rules regarding imprevention can be modified or excluded in your general terms and conditions.
Are your terms and conditions updated to reflect the above changes as of Jan. 1, 2023? Or do you not know how to deal with these changes in practice? We can provide a comprehensive screening of your terms and conditions and provide an update best suited to the needs of your business.
