On 8 September 2023, the Supreme Court rendered a judgment that is relevant to the validity of general terms and conditions in a business (b2b) setting. The consequential effect of the black and grey list seems to have been extended.
General terms and conditions in general
General terms and conditions (also known as the small print) are standard terms and conditions in which a commercial party (the user) sets out on which (standard) terms it wants to enter into an agreement. An agreement is formed by offer and acceptance. The law provides that general terms and conditions are considered to be accepted by the other party sooner than ‘ordinary’ agreements.
To prove acceptance, the user is therefore not required to prove that the other party has actually read and understood the general terms and conditions. In principle, it is enough that the user demonstrates that it has declared its general terms and conditions applicable, and that the other party has not (sufficiently expressly) rejected them. The result of this is that a party can be bound by (very) unfavourable terms and conditions without being aware of it.
The special statutory rules apply only where ‘general terms and conditions’ are concerned. These are expressly not ‘obligations touching the core of the performance’, such as the price or the specification of the deliverable.
Protection against unfair terms in general terms and conditions
Partly because of the acceptance that is assumed rather easily, the law offers two ways of protection against the applicability of unfair terms (which do not apply if the parties are foreign or if the other party is ‘large’). Previously, we wrote a blog about protection against terms in the general terms and conditions. A short reiteration is given here. Firstly, the other party must have had the opportunity to take cognizance of the general terms and conditions ultimately upon concluding the agreement. If the other party has not had this opportunity, and the general terms and conditions were not handed over in the appropriate way, this gives the other party a ground for nullification. Secondly, the other party can nullify a clause in the general terms and conditions if that clause ‘is unreasonably onerous’. This is an open standard in which the nature and other contents of the agreement, the way in which the terms and conditions came into being, and the respective interests of the parties are taken into account. Other circumstances may also play a role, such as the capacity of parties (e.g. private person, large multinational company or small and medium-sized business), the social position of the parties, possible expertise, and the relationship between the parties.
Consumers can refer to the ‘black’ and the ‘grey’ list that feature certain terms that are common in general terms and conditions. Terms on the black list are unreasonably onerous per se. Terms that are presumed by law to be unreasonably onerous are grey. With grey terms, the user can still submit evidence to the contrary that the term is not unreasonably onerous given the situation.
Consequential effect; Supreme Court seems to extend this
The black and grey list have what is known as a consequential effect. This doctrine was deepened in literature and case law and implies that enterprises can in some cases also rely on the two lists in the test as to whether the clause is unreasonably onerous. Until recently, the consequential effect seemed capable of application only in exceptional situations. In (lower) case law a consequential effect only seemed to exist for small companies, which in fact do not differ substantially from consumers. This seemed to cover especially legal entities that do not practise a profession or business.
In the judgment of 8 September 2023, the Supreme Court seems to wish to extend this extremely limited scope of the consequential effect somewhat. The Supreme Court confirmed that a consequential effect is also possible in cases where the other party has concluded an agreement in the practice of its profession or business, but this agreement does not relate to the actual professional or business activities.
The court case concerned a cheese and dairy company. This company had engaged an advisor to help it obtain a grant and to provide for an associated funding construction. The Supreme Court arrived at the opinion that the agreement did not relate to the actual activities of the business (dairy), which caused the position of the company to bear a strong resemblance to that of a consumer. In such a case, the circumstance that a clause features on the black or grey list can be relevant to the assessment of whether the clause is unreasonably onerous.
