- Corporate Law and M&A , Commercial and Economic Law
- Lynn Pype - Griet Verfaillie
- pre-contractual information , collaboration , agreement , Economic Law , CEL , trade name , cooperation , agency , franchising
As of 31 May 2014, book X of the Code Economic Law, entered into force.
This particular book of the Code of Economic Law joins the laws, which regulate the different
aspects of commercial distributions, such as the law on exclusive concession agreements, commercial
agencies and the law on pre-contractual information.
However, it goes further than a simple codification, since some essential points of the
pre-contractual information obligations have been changed.
The law of 2005 concerning pre-contractual information of commercial collaboration agreements
used to manage the pre-contractual relation between parties, who intended to sign a commercial
collaboration agreement, such as a franchising agreement.
According to this law, the party who grants the right to use a certain commercial formula or a
common trade name in the context of a commercial cooperation, is obligated to transmit certain
documents before the conclusion of the agreement.
If
this obligation has not been met, the other party has the right to demand the nullity of the
agreement within two years after the closing of the agreement. The same sanction is applied to the
violation of the standstill period of one month, after the date on which documents have been
transferred.
This severe sanction could lead to unfair situations. It could happen that a party invoked the
nullity of the agreement, only to escape its own obligations.
The codification of the law was the perfect opportunity of the legislator to implement certain
changes. The pre-contractual information obligations can be found in book X, title 2, articles X.26
to X.36 of the Code Economic Law and mitigate the strict dispositions of the law of 2005.
Firstly, the definition “commercial collaboration agreement” has been changed. The law of 2005
referred to an agreement between two persons, who each acted in their own name and for their own
account.
As a result, commercial agencies were excluded from the application of the law, given that they do
not operate in their own name. In the definition of article I.11, 2° of the Code Economic Law, the
words “in own name and account” have been deleted. Hence, when entering into a commercial agency,
the pre-contractual information obligations cannot be ignored.
However, insurance agency agreements and bank agency agreements are explicitly excluded from the
application of the law.
Furthermore, the nullity sanction for non-compliance with the transfer of the pre-contractual
documents has been toned down.
The pre-contractual information obligation implies that the party who grants the right has to
transfer two documents to the party who receives the right.
The nullity can still be invoked if the first document has not been transmitted.
However, if the second document has not been transferred, is not complete or not correct, an
application will have to be made of the vices of consent theory. In other words, the party who
receives the right will have to prove an error in consent, which will not be easy.
More important is that article X.30, 4° of the Code of Economic Law foresees in the possibility to
waive the nullity. This can only occur after the expiration of one month after the signing of the
agreement. In order to be valid, the party who waives the nullity sanction has to explicitly state
its motivation.
A last point of change concerns the compensation prohibition. The law of 2005 contained the
prohibition to ask any compensation, before the expiration of the standstill period of one month
after the signing of the contract. The current regulation allows compensations, but only in the
context of confidentiality agreements.