Contract Law 2023-2024 Sabine Thielemans

Contract Law
1 INTRODUCTION

1.1 NATIONAL LAW

 Differences between Civil law and Common law families
o common law: past legal precedents or judicial rulings are used to decide cases.
o civil law: codified statutes and regulations.
 Legal structures, reasoning, terminology, fundamental concepts
o f.i. penalty clauses designed to deter a party from breaking a contract (as
opposed to liquidated damages as compensation for an anticipated loss):
legitimate < > improper and unenforceable
o f.i. ‘good faith’: general principle in the execution of agreements < > specific
rules
 Internal differences
o Individual countries/states have developed their own (contract) law system
o This is not a comparative law course > Basic principles

1.2 CROSS-BORDER TRANSACTIONS

 Most national legal systems have no specific rules (‘substantive law’) for cross-border
transactions or international contracts in general.
 A transaction that touches the interests of two or more countries requires a choice of
the governing law if any disputes arises.
 This choice may determine the outcome of any legale disputes that arise between
parties.
> How to determine which set of rules is applicable in a certain situation?
> Need for a uniform international law?

1.3 DETERMINATION OF THE APPLICABLE AND OF THE SUBSTANTIVE LAW

 Competent tribunal/court - Law of the forum?
 International Private Law
o Primarily national law
o To a large degree influenced/unified by EU law or international treaties
 International sources of law
o Conventions, treaties, international soft law, …
 Party autonomy = (In arbitration) The parties’ freedom to determine and decide on the
applicable law to solve their dispute.
 Lex Mercatoria (Merchant Law) = Body of legal rules and principles, developed
primarily by the international business community.

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2 INTERNATIONAL PRIVATE LAW

2.1 MAIN QUESTIONS IN IPL:

 Which court has jurisdiction in disputes of private law?
 Which law is applicable in private law relations (civil/commercial)?
 Procedural matters (cross-border service of documents, gathering crossborder
evidence)
 Value of foreign judgments (enforcement abroad)
2 Types of rules in (material) IPL:
 Conflict rules (national or uniform): indicate the applicable law
 Substantive rules (mostly uniform rules): applied only after the conflict rule
Sources of conflict rules:
 Primarily national law
 To a certain(/large) degree influenced by EU law or international treaties
 Not worldwide unified: on different topics countries have diverging conflict of law
rules leading to a different result as to the applicable law > importance of jurisdiction
Starting point: a state will apply the law applicable by virtue of the conflict rule even if it
results in the application of foreign law (exceptions infra).
 European approach: ‘neutrality of conflict rules’: applicable law is determined by
rules that do not depend on the content of the resulting law.
 US approach: more ‘rule-selective’ (directly chosing between rules)
Conflict category: classify the issue in a category (property, tort, …, contract)
Connecting factor: refers to the applicable law (e.g. law chosen by the parties, law of
nationality, law of residence or seat, location of a thing, place of damage, …)
Exceptions: (inter)national public order, overriding (domestic or foreign) mandatory rules, …

2.2 CONTRACT LAW > CONFLICT RULES

Large unity (at least on the basic rule): in contract law every legal system accepts that the law
applicable to a particular relationship is basically the law chosen by the parties (‘lex
contractus’)
 Rome I - Regulation on the Law Applicable to Contractual Obligations (2008)
 Hague Principles on Choice of Law in International Commercial Contracts (2015)

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3 INTERNATIONAL SOURCES OF CONTRACT LAW

CISG = Convention on International Sales of Goods (‘Vienna Sales Convention’)
 1980, in force 1988 - developed by UNCITRAL (the UN Commission on
International Trade Law)
 Formal international treaty
 94 contracting states representing well over ¾ of the world’s trade in goods (exc.
United Kingdom, Ireland, India, South Africa, Indonesia, Taiwan, Iran)
 limited to (some aspects of) international business sales of movables (goods)
 Rome I - Regulation (art 25) does ‘not prejudice the application of international
conventions to which one or more Member States are parties’ > CISG prevails
UPICC = Unidroit Principles of International Commercial Contracts
PECL = Principles of European Contract Law 18
CISG = Convention on International Sales of Goods (‘Vienna Sales Convention’)
UPICC = Unidroit Principles of International Commercial Contracts
 1994, updated versions 2004, 2010, 2016
 developed by UNIDROIT (International Institute for the Unification of Private Law,
private body)
 Soft law: parties to an international context may expressly choose the Principles as the
law to govern their contract + commonly used in arbitrations as a general statement of
international contract norms (more neutral statement of international custom)
 Provide rules for all types of international commercial contracts (extra-EU business
transactions)
PECL = Principles of European Contract Law 19
 CISG = Convention on International Sales of Goods (‘Vienna Sales Convention’)
 UPICC = Unidroit Principles of International Commercial Contracts
 PECL = Principles of European Contract Law
 1995, 1999, 2002
 Idea: the need for an European Code of Obligations (legal uniformity necessary for an
integrated European market)
 Developed by the Commission on European Contract Law (expert lawyers member
states) - Soft law, non-binding
 Intended to apply to contracts in generally (commercial + customer/merchant
relations)
 compilation of the law of the EU member states as well as non-European law; ridging
the gap between the civil law of the European continent and the common law of the
AngloAmerican system > a view of the current European consensus on contract law
(no need to analyse the law of the individual states in detail).
 Very similar to UPICC 20

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CISG = Convention on International Sales of Goods (‘Vienna Sales Convention’)

Scope of application – ratione materiae
 CISG applies to ‘contracts of sale of goods’ (no definition in CISG) (art 1)
o an obligation to transfer property + an obligation to pay the purchase price (no
barter, gift, …) –
o corporeal movables (incl. gaz; tendancy to accept sales of software & digital
content)
o Not: consumer sale (goods bought for personal, family or household use),
auction, … (art 2)
 Mixed contracts (art 3): incl. contracts for the supply of goods to be manufactured or
produced (not: supply of labour)
Territorial application – ratione loci (art 1)
 Only international business sales
 Direct application (a): Parties whose places of business are in different States and
both States (of place of business) are Contracting States (i.e. have ratified CISG).
 Indirect application (b): when the rules of IPL of the forum lead to the application of
the law of a Contracting State > art 95: contracting State may exclude indirect
application
 Party autonomy: CISG applies as chosen by the parties as the law applicable to the
contract + choice of law of a contracting state includes choice of CISG and is not
presumed to exclude CISG
CISG = Convention on International Sales of Goods (‘Vienna Sales Convention’)
 Exclusion of application
o Art 6: The parties may exclude the application of this Convention or, subject
to article 12, derogate from or vary the effect of any of its provisions.
o Art 95: Any State may declare at the time of the deposit of its instrument of
ratification, acceptance, approval or accession that it will not be bound by
subparagraph (1)(b) of article 1 of this Convention.
o Art 96 (infra)
 Regulated matters under CISG
o Only law of obligations of seller and buyer, no property law (art 4).
o No procedural law, esp. burden of proof - Only formation (incl. question of
writing), performance, non-performance and associated questions (art. 4)
o Passing of risk (Ch. 4).
o Some (deliberate) lacunae (gaps) such as price revision, interest rate, …

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4 PARTY AUTONOMY
Choice of law by party agreement: widely accepted
 Unlimited
o cf. Chinese law
 Unlimited except with regard to mandatory rules
o cf. EU: Rome I – Regulation
o cf. PECL
 Limited
o cf. USA: only if the transaction bears a ‘reasonable relation’ with a foreign
country’s law
o cf. PECL: freedom is subject to principles of good faith and fair dealing
Choice of law in ‘general terms and conditions’ (standard business terms)
 Legal effect or battle of the forms?
 Depends on the applicable conflict rule

5 LEX MERCATORIA
 Merchant’s Law, an autonomous, non-national legal system of custom and best
practice that applies or could apply to international commercial transactions?
 Divergent opinions: possible choice of law and not merely integration of a rule in a
contract? Many of these rules and practices will be applicable simply because they are
part of a contract.
 Tendency to accept the lex mercatoria as a legal order in arbitration (not before state
courts) (‘general principles of law’ or ‘internationally accepted principles’ cf. PECL)
 Practical question: where to find these rules? Are there rules which are generally
accepted? Risk of opposite ideas/interpretation about the content
o Example: UPC (The Uniform Customs and Practice for Documentary Credits)
= a set of rules on the issuance and use of letters of credit, utilized by bankers
and commercial parties in trade finance (codification by the ICC)

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Basic Principles of Contract Law

1 CONCEPT

1.1 AGREEMENT OR CONTRACT?

 Agreement = a mutual understanding between two or more parties about their rights
and obligations with respect to a particular matter.
o Verbal, written, formal or not
o Legally binding or not: see content, terminology, behaviour to establish the
intention of the parties
 Contract = an agreement giving rise to obligations (Established legal connection
between ‘creditor’ – ‘debtor’) which are recognized or enforceable by law.

1.2 SYNONYMS?
 ‘Negotium’ (the agreement) vs. ‘Instrumentum’ (the written agreement/contract)
 2023: interchangeable concepts (legal terminology)
“Every contract is an agreement but not every agreement is a contract” 29

1.3 TYPES OF CONTRACT

Obligation to do, not do or give
 Delivery of goods within certain timeline, reparation of car, defense of interests, …
 non-disclosure agreement (NDA), non-competition, prohibition of…
 payment, transfer of property, …
Unilateral or multilateral agreement = obligations for 1 or for all parties involved (quality
of debtor ànd creditor)
Legally binding and enforceable by law
 not: social, moral, religious agreements
 in business?
o Gentlemen’s agreement
o Letter of intent (LOI)
Gentlemen’s agreement: an (in principle) informal agreement or understanding between two
or more parties, typically involving mutual promises or commitments based on trust, honor,
and respect among the parties, rather than on the enforcement of legal terms.
Letter of intent (LOI): a document that outlines the preliminary agreement or understanding
between two or more parties regarding a proposed business transaction or deal.
 an (in principle) non-binding document that states the parties' intentions and serves as
a starting point for further negotiations

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 basic terms and conditions of the proposed transaction (e.g., purchase price, payment
terms, timeline), conditions and contingencies that must be met for the transaction to
be completed (e.g., regulatory approvals, due diligence, financing)
Result-based contract = the parties involved agree to be bound by the achievement of
specific results or outcomes (performance of the parties and thus remuneration, is measured
against a specific outcome or result)
Best-effort agreement = parties agree to use their best efforts to achieve a goal, but with no
guarantee of success
Contract in personam (‘intuitu personae’) = a type of contract that is entered into based on
the personal qualities or characteristics of the parties involved (rather than on any particular
property or asset)
 f.i. partnership agreement
Framework agreement > implementation agreements = a ‘window’ contract in which the
contracting parties establish the general framework within which they will conclude later
(implementation/executing) agreements
Accession agreement (vs. negotiated agreement) = An agreement concluded between two
parties in which the (economically) weaker party has no control over the content of the
agreement, which is actually unilaterally determined by the (economically) stronger party.
The weaker party actually only has the freedom to either enter into the framework given or
not. The freedom to contract is particularly relative when it comes to necessary goods or
services.

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2 VALIDITY
Starting point: freedom of contract + autonomy of will/choice
 Free to enter into contract (or not) with anyone and to determine the terms of the
agreement without undue interference from the law.
Consensualism: Concurrence of free will is sufficient (consensus) ---> infra
 Dominant approach (civil and common law systems)
 The contract is formed by the mutual agreement and consent of the parties involved,
without the need for any specific formalities

2.1 VALIDITY REQUIREMENTS

Parties must enter into the agreement voluntarily and with a clear understanding of the terms.
Conditions =

2.2 CONSEQUENCES OF INVALIDITY = NULLITY

 The contract is deemed ‘null and void’ and therefore never existed (retroactivity)
 Parties should be placed back in the situation as if no contract had ever been
concluded > refund obligations, reimbursements, etc.
 The nullity must be pronounced by a court of law
 Absolute nullity:
o The contract is considered to be legally invalid from the moment it was
formed
o F.i. Violation of a mandatory legal provision or public policy (unlawful cause)
 Relative nullity:
o The contract is legally binding until a party chooses (takes action) to challenge
or contest its validity.
o F.i. Contract entered into under false pretenses, fraud, or mistake, or by parties
lacking legal capacity

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B2C – Consumer contracts

 EU-regulation: a.o. The Unfair Contract Terms Directive (93/13/EEC, as amended)
o Protect consumers against ‘unfair’ (standard) contract terms imposed by
traders.
o To be enacted into national law by member states (f.i. Belgian Law:
‘unlawful’ terms)
 General condition: comprehensible language, ambiguities are to be interpreted in
favour of consumers
 Black list of clauses > will automatically be annulled
o Prohibit the consumer from requesting the termination of the contract in the
event that the company fails to honour its commitment;
o Not to allow the consumer to terminate the contract in cases of force majeure,
except on payment of damages;
o Set an unreasonably short deadline for reporting defects in the delivered
product to the company;
o Bind the consumer for an indefinite period of time, without clearly specifying
a reasonable notice period;
o In case of dispute, to make the consumer waive any remedy against the
company; …
 General standard of testing > much greater discretion for the court
o Clauses not explicitly described in the blacklist but which nevertheless create
an ‘apparent imbalance’ between the rights and obligations of the parties to the
detriment of the consumer.
B2B – Business contracts
 Less European, more national legislation, f.i.:
 UK: The Unfair Contract Terms Act 1977:
o Prohibition of exclusion clauses to limit liability for death or injury (under any
circumstances), losses or damage caused by negligence (unless to do so is
'reasonable’), defective or poor-quality goods (unless to do so is 'reasonable’)
 Belgian Code of Economic Law (2019)
o General principle: contract terms creating a manifest imbalance in a contract
between professionals are unfair and should be declared null and void.
o Black list of (4) terms: considered unfair and thus prohibited in any event (no
rebuttal)
 Create an irrevocable obligation for one contract party while the
performance of the other party’s obligations is subject to a condition
whose fulfilment depends solely on the will of that party;
 Confer on a party the right unilaterally to interpret a contract provision;
 In the event of a dispute, have the other party renounce all means of
recourse; or

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 Irrefutably establish the other party’s knowledge or acceptance of

terms of which that party did not have actual knowledge before the
conclusion of the contract.
o Grey list: presumed to be unfair unless proven otherwise (rebuttable
presumption), f.i.:
 Give a party the right unilaterally and without valid reason to modify
the price, characteristics or terms
 Tacitly extend or renew a fixed-term contract without providing a
reasonable notice period; …

2.3 ABUSE OF RIGHTS

(f.i.) Belgian Civil Code (art. 1.10): general principle in civil law
“No one may abuse his right. Whoever exercises his right in a manner manifestly beyond the
limits of the normal exercise of that right by a prudent and reasonable person placed in the
same circumstances is abusing his right. The sanction for such an abuse is the mitigation of
the right to its normal exercise of law, without prejudice to the reparation of the damage
caused by the abuse.”
Specific criteria: an abuse of right exists when the holder of the right exercises it:
 with the exclusive intention of harming another;
 without a reasonable and sufficient interest, while causing harm;
 in a manner useful to him but in a manner detrimental to another, when the holder
could have chosen another manner equally useful to him and less detrimental to the
other;
 while there is a disproportion between the benefit which that exercise of the right may
confer on him and the prejudice thereby caused to the other.
Partial nullity (stipulated in the contract)
 Invalidity of a contract clause # invalidity of the contract as a whole
 “The nullity or invalidity of a specific provision of this agreement shall not result in
the nullity of the entire agreement. The void provision shall be replaced by the Parties
by mutual agreement by a valid provision that approaches the intention of the Parties
as much as possible.”
Reduction and Moderation (by courts) = The void clause is reduced to a less far-reaching
clause of the same nature but of lesser intensity
 The possibility of reducing excessive amounts in penalty or fine clauses
 Damage repair or compensation instead of nullity
 In case of abuse of rights: reducing the right to its normal use + compensation

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3 FORMATION OF THE CONTRACT

An agreement is established when offer meets acceptance.
Offer: a firm and precise proposal to contract made by one of the parties so that to bring the
contract into existence, the other party only has to accept it.
 ‘firm’: intention of the offeror to be bound by a contract in case of acceptance (see
actual circumstances, statements, behaviour of the offeror)
 precise’: in which all the elements essential and substantial for the formation of the
contract are present
 If not firm and precise: invitation to make an offer (‘invitation to treat’)
Differences civil < > common law as to binding force
Obligation to maintain an offer or freedom to revoke it?
 Binding offer: binds the offeror for the period of time specified in the offer or during a
‘reasonable’ reflection period
 Civil law: irrevocability
o Early withdrawal not possible once it has reached the addressee: the contract is
still concluded if the addressee has accepted the offer within the
aforementioned time period (+ can prove it)
o Reluctance of case law and legal doctrine to establish formation of the contract
(rather monetary damages; damage = loss of an opportunity)
 Common law: revocability
o Revocation is possible and effective at any time before acceptance

3.1 ACCEPTANCE
Civil and common law
 Explicitly without reservation within the time period foreseen in the offer
 Implicitly = ‘circumstantial silence’ = a silence which, given the concrete
circumstances, cannot be interpreted as anything other than an acceptance

3.2 GENERAL TERMS AND CONDITIONS

Context:
 Timesaving
 Risk of abuse: cf. unfair and unlawful clauses in consumer contracts
Part of the contractual relationship between parties = subject to acceptance
Battle of forms: see Belgian Civil Code (art. 5.23)
 “The inclusion of general terms and conditions of a party in the contract requires their
effective knowledge by the other party or at least the possibility for the latter to
effectively take note of them, as well as their acceptance. In case of conflict between

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the general terms and conditions of one of the parties and the negotiated terms, the
latter shall prevail. If offer and acceptance refer to different general terms and
conditions, the contract is nevertheless concluded. Both general terms and conditions
shall form part of the contract, except for the incompatible clauses. Notwithstanding
the third paragraph, the contract shall not be formed if a party expressly indicates in
advance or without undue delay after receipt of the acceptance, and not through
general terms and conditions, that it does not wish to be bound by such a contract.”
Contracts under condition
Suspensive condition = the agreement only comes into effect once the condition is fulfilled.
 f.i. purchase of a house under a suspensive condition of financing: the contract is
formed only if the financing is approved.
Resolutive condition = the agreement is dissolved or invalidated if the condition is not
fulfilled.
 f.i. the purchase of a house under a resolutive condition of a structural inspection: the
buyer can dissolve the agreement if defects are found during the inspection “The
purchase has been made subject to the suspensive/resolutive condition of obtaining a
loan.”
Contracting with representation
Representative authority
 situation where a person (an agent or representative) enters into a contract on behalf
of another person or entity (the principal)
Doctrine of ‘apparent authority’
 situation where a person, who may not have actual authority to act on behalf of
another person or entity, gives the impression to a third party that they do have such
authority.
 If the third party reasonably believes that the person has this authority, the person may
be able to bind the other person or entity to a contract, even if they do not have actual
authority to do so.
cf. Common law: ‘estoppel’ : legal principle that prevents a person from denying or
contradicting a previous statement, action, or agreement that they have made, if doing so
would be unfair to another person who has relied on that statement, action, or agreement. (~
‘good faith’ in civil law)

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4 EXECUTION OF CONTRACTS
Starting point: valid and ‘clear’ contract
 During the execution phase, one or both parties fails to perform as agreed upon in the
contract (rights and obligations arising from the contract?)
 Complete non-performance, incomplete, defective, late performance

4.1 CONTRACTUAL NON-PERFORMANCE

Attributable
 Inability to perform is due to fault or negligence
 Parties responsible for the non-performance CAN be held liable for any damages that
result from their failure to fulfill their contractual obligations
Non-attributable
 Occurs due to circumstances beyond the control of the party > liability?

4.2 ATTRIBUTABLE NON-PERFORMANCE

Fault or negligence
 (slight – serious – intentional)
 result-based or interest-based contracts
 general criterium: prudent and reasonable person placed in the same circumstances
(‘bonus pater familias’ / ‘good housefather’)
Burden of proof
 Who: the creditor (the party who is entitled to performance of a contractual obligation
by the debtor)
 What: - the existence and non-performance of the contractual obligation -
fault/negligence of the debtor - [evidence of damage and causal relationship?]
Personal fault or fault by third parties for which the debtor is responsible
 third party with whom the debtor has a relationship of responsibility or authority
 f.i. a company may be held liable for the actions of its employees or subcontractors, a
parent for the actions of their minor child, etc.

4.3 EXCEPTIONS AND DEFENCES OF THE DEBTOR

Existence and/or scope of the contractual obligation
Non-attributability ---> infra
 The non-performance cannot be attributed to the debtor when it is due, not to a
wrongful act or omission, but to a foreign cause, namely in case of force majeure or

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when it is due to the creditor himself or to a third party for whose behavior the debtor
is not responsible
Exoneration clauses (‘exclusion clauses’ or ‘limitation of liability clauses’)
 Contractual derogations from contractual liability (party autonomy)
 Goal: limit or exclude one party's liability for certain types of damages or losses that
may arise from the performance or non-performance of the contract.
Validity?
 May not undermine the essential obligations of the agreement (f.i. Exoneration for
non-delivery of goods)
 Acceptance
 Concurrence of free will
 Restrictive interpretation (f.i. Exoneration for gross negligence is not implied an
exoneration clause stipulated in general terms)
 Lawful: not contrary to mandatory law or public policy + no exoneration for fraud

4.4 NON-ATTRIBUTABLE NON-PERFORMANCE

Force majeur
 Non-performance occurs due to circumstances beyond the control of the party
(unavoidable and unforeseeable at the time of contracting)
o General principle of law or contractual provision
o Result: no liability
Imprevision or hardship
 Unforeseen events/circumstances occuring after the formation of a contract that
significantly alter the balance of the contractual obligations between the parties,
making it excessively burdensome or impracticable for one or both parties to fulfill
their obligations
o Result: basis for parties to renegotiate or modify the terms of their contract, or
even terminate the contract, in order to adjust to the changed circumstances.

4.5 REMEDIES OR SANCTIONS FOR THE CREDITOR

1. In principle: right to receive performance
2. Substitutive damages (‘performance by equivalent’)
3. Damages or Penalty clauses (as part of the contract)
4. Suspension of the contract
5. Termination of the contract

1. In principle: right to receive performance

Specific performance by the defaulting debtor, or authorization to perform the obligation by
the creditor himself, or to have it performed by a third party at the debtor's expense

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Potentially: additional monetary damages if the creditor is not restored to the position they
would have been in if the contract had been properly fulfilled. The damages are intended to
compensate for any remaining losses or damages suffered by the injured party as a result of
the breach.
In obligations that had a payment of a sum of money as their object from the start, the
compensation for late performance consists of the payment of default interest (legal interest
rate or contractually stipulated) in addition to the principal amount

2. Or just right to receive damages?

If specific performance (primary contractual obligation) is impossible or would lead to an
abuse of rights, the creditor may request 'performance by equivalent' of the breached
obligation (substitutive damages = monetary compensation)

3. Damages or Penalty clauses (as part of the contract)

A penalty clause is a provision in a contract that requires a party to pay a disproportionate
amount of damages in the event of a breach of contract, with the purpose of punishing the
breaching party rather than compensating the non-breaching party for actual damages
suffered (damages clause).
Damages clauses: widely accepted
Penalty clauses generally not enforceable under common law < > In some civil law
jurisdictions, penalty clauses may be enforceable under certain conditions (f.i. if they are
expressly agreed upon by the parties, if they are not excessive, if they are not manifestly
unfair or contrary to public policy, …)
4. Suspension of the contract
Exemption from non-performance of the contract (exceptio non adimpleti contractus -
ENAC)
Allows a party to suspend its own performance under the contract until the other party fulfills
its own obligations.
5. Termination of the contract

Formal notice of default

 A written communication sent by the creditor to the debtor to inform him that he has
breached the obligations under a contract and to clearly and unambiguously urge the
debtor to fulfill these obligation.
 Required before a creditor can enforce his rights against his debtor

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5 TERMINATION OF THE CONTRACT

Termination for non-performance
 Attributable (‘dissolution’) = in situations where one party has breached the contract,
giving the other party the right to terminate the contract due to the breach
 Non-attributable = persistent force majeure
Termination for other reasons (‘resiliation’)
 No breach by either party, but one party wants to end the contract for another reason,
such as the contract no longer being beneficial
Termination of the contract due to the end of the term (‘expiration’)
 Fixed-term contracts (renewable?) Vs. Indefinite contracts (notice period?)

6 OTHER CONTRACTUAL PROVISIONS

Non-compete clause
 A clause in a contract between two people under which one person refrains from
competing with the other – either as an employee or in a self-employed capacity.
 B2b: freedom of contract vs. Freedom of enterprise
 Restricted and reasonable: (i) always serve the legitimate interests of the party
imposing the clause (protection of know-how, client base, and employees where there
is a real risk that the co-contractor can engage in competition.), and (ii) be limited in
time, space, and activities.
! Unfair competition is always prohibited (see International Business law)
Confidentiality clauses
 Provisions that require the parties to keep certain information confidential and not
disclose it to third parties without permission.
 Cf. Nda (non disclosure agreement)
Privacy clauses
 Provisions that specify how personal information will be collected, used, and
protected by the parties to the contract
 Regulation (eu) 2016/679 of the european parliament and of the council of 27 april
2016 on the protection of natural persons with regard to the processing of personal
data and on the free movement of such data (‘gdpr’)
> protect sensitive information

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Boilerplate clauses (‘Standard closing provisions’)

 Entire Agreement clause (‘four corners clause’) = “The contract contains the entire
agreement between the parties and supersedes all previous discussions or
agreements.”
 Headings clause = “The headings of the provisions of this Agreement are for
overview only and shall not prejudice the interpretation thereof.”
 Partial nullity clause = “The nullity or invalidity of a specific provision of this
agreement shall not result in the nullity of the entire agreement. The void provision
shall be replaced by the Parties by mutual agreement by a valid provision that
approaches the intention of the Parties as much as possible.”
 Evergreen clause = “The confidentiality obligations set forth in this Agreement shall
survive the termination of this Agreement and shall remain in effect indefinitely,
unless and until the disclosing party provides written notice to the receiving party of
its intent to terminate such obligations.“
 Governing Law and Jurisdiction (‘forum’)

INCOTERMS (International Commercial Terms)

 A set of standardized trade terms that are used to define the responsibilities and
obligations of buyers and sellers in international trade transactions. - developed by the
international chamber of commerce (icc) to provide a common language and set of
rules for international trade.
 Define the obligations of the buyer and seller in relation to: delivery of goods,
payment of transportation costs, allocation of risk, insurance coverage, customs
clearance and duties
 Commonly used incoterms include:
o Exw (ex works): the seller makes the goods available at their premises, and the
buyer is responsible for loading and transportation.
o Fob (free on board): the seller is responsible for loading the goods onto a
shipping vessel, and the buyer is responsible for transportation and insurance
from the port of origin.
o Cif (cost, insurance, and freight): the seller is responsible for the cost of
transportation and insurance to the port of destination, but the buyer is
responsible for unloading the goods and paying any customs duties.

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Major Contracts
1 INTERNATIONAL SALE OF GOODS
 IPL: conflict rule > Rome I-Regulation
 CISG = Convention on International Sales of Goods (‘Vienna Sales Convention’)
 International Source of contract law (substantive rules)
 1980, in force 1988 - UNCITRAL - Formal international treaty
 94 contracting states representing well over ¾ of the world’s trade in goods
(exceptions!)
 Limited to (some aspects of) international business sales of movables (goods)
 Rome I - Regulation (art 25) does ‘not prejudice the application of international
conventions to which one or more Member States are parties’ > CISG prevails
Scope of application – ratione materiae
 CISG applies to ‘contracts of sale of goods’ (no definition in CISG) (art. 1)
o An obligation to transfer property + an obligation to pay the purchase price
(no barter, gift, …)
o Corporeal movables (incl. Gaz; tendancy to accept sales of software & digital
content)
o Not: consumer sale (goods bought for personal, family or household use),
auction, … (art 2)
 Mixed contracts (art 3): incl. Contracts for the supply of goods to be manufactured or
produced (not: supply of labour)
Territorial application – ratione loci (art. 1)
 Only international business sales
 Direct application (a): Parties whose places of business are in different States and
both States (of place of business) are Contracting States (i.e. Have ratified CISG).
 Indirect application (b): when the rules of IPL of the forum lead to the application of
the law of a Contracting State > art 95: contracting State may exclude indirect
application
 Party autonomy: CISG applies as chosen by the parties as the law applicable to the
contract + choice of law of a contracting state includes choice of CISG and is not
presumed to exclude CISG
Exclusion of application
 Art 6: The parties may exclude the application of this Convention or, subject to article
12, derogate from or vary the effect of any of its provisions.
 Art 95: Any State may declare at the time of the deposit of its instrument of
ratification, acceptance, approval or accession that it will not be bound by
subparagraph (1)(b) of article 1 of this Convention
 Art 96 (infra)

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Regulated matters under CISG

 Only law of obligations of seller and buyer, no property law (art 4).
 No procedural law, esp. Burden of proof
 Only formation (incl. Question of writing), performance, non-performance and
associated questions (art. 4)
 Passing of risk (Ch. 4).
 Some (deliberate) lacunae (gaps) such as price revision, interest rate, …
Matters of the law of obligations NOT regulated
 Validity and invalidity of the contract, incl. Legal capacity
 Precontractual information insofar as relevant for validity (but impact of information
on interpretation and conformity is a cisg matter)
 Unfair commercial practices
 Liability for damage consisting of death or personal injury (art 5 cisg) - prescription -
assignability of rights
 Subrogation
 Plurality of debtors
 Authority of agents
> Choice of law useful for matters not regulated

2 SHARE PURCHASE AGREEMENT

Share deal vs. Asset deal
 Share deal (SPA) = The buyer purchases the shares of the target company from the
existing shareholders. As a result, the buyer acquires ownership of the entire
company, including its assets, liabilities, and any legal obligations (employees,
contracts, goodwill, etc.)
 Asset deal = The buyer purchases specific assets of the target company, such as its
equipment, inventory, or intellectual property, but does not acquire ownership of the
entire company. The buyer may also assume some of the liabilities of the target
company, but only to the extent that they are specifically agreed upon.
Due diligence
 Assessment of assets, liabilities and commercial potential,
 Including a comprehensive review of financial and legal records, operational
procedures, contracts, and other relevant documents,
 In order to make an informed decision about whether to proceed with the transaction,
and if so, under what terms and conditions.

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IPL
 conflict rule > Rome I-Regulation
o Choice of the parties (art. 3)
o In the absence of choice: the law of the country where the party required to
effect the characteristic performance of the contract has his habitual residence
(art 4, 2°)
 Substantive rules
o Excluded explicitly by cisg (art. 2, d)
o No ‘global’ uniform law > national (contract) law

3 DISTRIBUTION AGREEMENTS
Direct sales vs. indirect sales via intermediaries
 Commercial, financial, legal, practical reasons = f.i. efficient marketing, use network
effects, less capital, advantage of a separate entity, division of risks and profits,
management of stocks, etc.
 Disadvantages?
Forms of distribution
1. Distribution s.s.
2. Franchising
3. Commercial Agency
4. Commission Agent
Distribution agreement (strict sense)
Concept
 ‘Distributorship’ / ‘concession’ (wholesale) or ‘dealership’ (retail)
 A concession to (re)sell with an obligation for the distributor to buy from the supplier
and for the supplier to supply/sell to the distributor; often further obligations related to
resale, marketing, etc.
 Distributor buys and resells in its own name and for its own account (chooses in
principle its price for selling)
 To be distinguished from sales contracts taking place within this framework
Terms (a.o.)
 Territory. Exclusivity ? May supplier sell directly (‘dual distribution’) in the territory
and/or online ?
 May the distributor sell competing products ?
 Minimum sales quota ?
 Obligations concerning stocks, after sales service, qualified staff, etc.
IPL
 Conflict rule: Rome I-Regulation:

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o Choice of the parties (art. 3)

o In the absence of choice: the law of the country where the distributor has his
habitual residence (art 4, f)
o National mandatory rules: > f.i. Belgian statute of 1961 (part of Economic law
code) for concessions on Belgian territory > application of Belgian law
 Substantive rules
o No ‘global’ uniform law
o National (contract) law + specific rules concerning the effects of termination
o > f.i. Belgian statute of 1961: overriding mandatory provisions
o > other countries: protective law for abusive termination of the distribution
 Belgian statute of 1961 on the unilateral termination of distribution agreements
(Economic law code, art. X.35-40)
 Scope of application: 3 conditions
o Exclusive, quasi-exclusive, or serious investments by the distributor
o Belgian territory
o Indefinite period or after 3 x definite period
 Effects of termination except for fundamental breach by distributor:
o Termination giving notice with a ‘reasonable period’ (not determined) or
compensation corresponding to that period
o Equitable additional compensation for: goodwill (remaining to supplier),
investments profiting to supplier, and severance (costs of dismissing
employees)
 Jurisdiction of Belgian courts
Franchising
Concept
 Specific form of distributorship (goods, also possible for services, combined with a
licensing contract)
 A franchisor grants the right to use its brand, business model, uniform sales
presentation, and intellectual property and know-how to a franchisee (commercial &
technical assistance and training by franchisor (e.g. collective publicity and
promotion) In return, the franchisee pays an initial franchise fee (‘front money’) and
ongoing royalties based on a percentage of their revenue, plus usually a duty of the
franchisee to make investments
 f.i. McDonald’s, Carrefour Express, …
 Advantages: (for franchisee) proven track record and established brand recognition,
(for franchisors) growing their business without the financial risk of opening new
locations themselves 94
IPL
 Conflict rule: Rome I-Regulation:
o Choice of the parties (art. 3)
o In the absence of choice: the law of the country where the franchisee has his
habitual residence (art 4, 1°, e)

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Substantive rules
 International models (f.i. Uncitral Model Franchise Disclosure Law 2002, ICC model
international franchising contract)
 National (contract, IP) law + specific rules
o F.i. Pre-contractual information obligation
 All relevant information about the franchise concept, including costs,
operations, the extent of support, and franchise fees.
 Often in the form of a PID (precontractual information document) or
FDD (Franchise Disclosure Document)
Commercial Agency
Concept
 An independent agent negotiates and possibly concludes contracts in the name and on
behalf of the principal
Principal determines the price; income of the agent = commission on sales
Commission Agent - act in their own name on behalf of the principal
Sales representative - employee with an employment contract: acts in the name and on
behalf of the principal.

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