Breach of contract in Belgium: your remedies under the new law of obligations

A supplier who fails to deliver, a service provider whose work falls short, a partner who ends the contract unilaterally: a breach of contract in Belgium costs money. Book 5 “Obligations” of the Civil Code (Burgerlijk Wetboek / Code civil), which entered into force on 1 January 2023, provides a structured set of remedies. Those who use them in the right order are in the strongest position. This article offers a practical overview for business owners and their advisers.

Which rules apply to your contract?

The new law of obligations applies in principle to contracts concluded on or after 1 January 2023. Older contracts remain governed by the rules of the former Civil Code, including effects that only arise later, unless the parties agree otherwise (Article 64 of the Act of 28 April 2022); the courts had, however, already accepted many of the new solutions. Always look first at the contract itself and at the general terms and conditions: deadlines, notice clauses, termination clauses and limitations of liability often determine the outcome.

First step: the formal notice

Save for exceptions (Article 5.233 of the Civil Code), everything starts with a formal notice (ingebrekestelling / mise en demeure): a clear and unambiguous demand for performance (Article 5.231 of the Civil Code), preferably in writing, that describes the breach specifically and allows a reasonable period to remedy it. A registered letter is not always mandatory, but it remains the safest proof of dispatch. Comply strictly with contractual notice clauses, such as a required form or deadline; otherwise your claim may fail on that ground.

For a money debt, the formal notice as a rule starts statutory interest running. Commercial transactions between businesses enjoy a more favourable regime: under the Act of 2 August 2002 on combating late payment in commercial transactions, interest then accrues automatically, without any formal notice, from the day after the payment deadline. You can read more in our article on late payment interest and penalty clauses.

Your remedies for breach of contract in Belgium

• Specific performance: you require the other party to perform after all, unless this would be impossible or abusive (Article 5.234 of the Civil Code). The court may attach a penalty payment (dwangsom / astreinte), except where the order concerns the payment of a sum of money.
• Price reduction: if the performance is defective but you wish to keep it, you may ask for a proportionate reduction of the price.
• Suspending your own performance: as long as the other party fails to perform, you may suspend your own obligation (exceptio non adimpleti contractus), but only in good faith and in proportion to the breach.
• Termination: in the event of a sufficiently serious breach, the contract may be terminated: by the court, under a termination clause in the contract, or by written notice to the other party, at your own risk.
• Damages: for the loss you suffered and the profit you missed, as a rule limited to the damage that was foreseeable when the contract was concluded, except in the case of an intentional breach.

These remedies can be combined, provided they are compatible: you may, for example, terminate the contract and also claim damages. Choose the combination deliberately from the outset, since termination and specific performance are mutually exclusive.

New rules you should know

• Termination by notice: you may terminate a contract without prior court involvement by sending a written notice that sets out the breaches (Article 5.93 of the Civil Code), as a rule after a formal notice. If the court later finds that the termination was not justified, you yourself will be liable.
• Anticipatory termination: in exceptional circumstances, you may terminate the contract even before the due date where it is clear that the other party, after being called upon to provide adequate assurance of due performance within a reasonable period, will not perform on time and the consequences of that non-performance are sufficiently serious for you (Article 5.90 of the Civil Code).
• Change of circumstances (hardship): where an unforeseeable change of circumstances that is not attributable to a party, and the risk of which that party had not assumed, makes performance excessively onerous so that it can no longer reasonably be required, that party may request renegotiation and, if this fails, ask the court to adapt or terminate the contract (Article 5.74 of the Civil Code). The contract may depart from this rule. Under the former law, hardship was not accepted as a general rule.

Force majeure

A party that fails to perform is not liable if the breach is due to force majeure (overmacht): an event that makes performance impossible, could not be foreseen when the contract was concluded, could not be avoided and cannot be attributed to that party (Article 5.226 of the Civil Code). If the force majeure is temporary, performance is in principle suspended; if it is permanent, the contract may come to an end. The contract may contain its own rules on this, such as a force majeure clause with a duty to notify. A party relying on force majeure must prove it and is well advised to inform the other party as soon as possible.

Liquidated damages clauses: compensation agreed in advance

Many contracts fix in advance the compensation payable in the event of a breach, for example a fixed amount per day of delay. Such a liquidated damages clause (schadebeding / clause pénale) is valid, but it must compensate the loss and not punish the other party. The court reduces the clause, of its own motion or at the debtor’s request, where it is manifestly unreasonable, taking into account the loss and all other circumstances (Article 5.88, § 2, of the Civil Code). A realistic amount is therefore stronger than a deterrent one.

Limitation of liability clauses

Many contracts limit or exclude the liability of one party. Such clauses are valid in principle, but they do not apply to intentional misconduct or to fault that affects a person’s life or physical integrity, and may not deprive the obligation of its substance (Article 5.89 of the Civil Code). Between businesses, a clause that creates a manifest imbalance between the rights and obligations of the parties may also be unfair and therefore void (Book VI of the Code of Economic Law). Even stricter rules apply in relation to consumers.

Evidence and strategy

Contracts, purchase orders, emails, delivery notes and reports: the file wins the case. Against a business, evidence may in principle be provided by any means (Article 8.11 of the Civil Code), but a well-kept written record remains the strongest asset. We build the chain of evidence, choose the remedy with the best cost-benefit ratio and negotiate in parallel, because a good settlement is often faster and more certain than a judgment. Where an undisputed money debt between businesses is involved, the IOS procedure (invordering van onbetwiste schulden) through a bailiff (gerechtsdeurwaarder / huissier de justice) can offer a quick way out.

Settlement and mediation

Court proceedings are not always the best route. With a settlement agreement (dading / transaction), the parties end their dispute through mutual concessions; always record it in writing, with a clear description of what is and is not settled. With an accredited mediator, the parties can look for a solution with guidance; a mediation agreement may, under certain conditions, be approved by the court, which makes it enforceable.

Frequently asked questions

Does a formal notice always have to be sent by registered post?

No, unless the law or the contract requires a particular form. A registered letter, possibly with a copy by email, does make it much easier to prove that it was sent.

Can I terminate a contract without going to court?

Yes, under a termination clause or by written notice, but only in the event of a sufficiently serious breach. You bear the risk: if the court later takes a different view, you may yourself owe damages.

Who pays the costs of the proceedings?

As a rule, the losing party bears the legal costs, including a procedural indemnity (rechtsplegingsvergoeding / indemnité de procédure): a fixed contribution towards the winning party’s lawyer’s fees, the amount of which depends on the value of the claim. Your own legal fees are therefore rarely covered in full.

May I withhold my entire payment in the event of a partial breach?

Only in proportion to the breach. Excessive suspension may put you in breach yourself.

How long do I have to bring a claim?

Personal claims are as a rule time-barred after ten years, but shorter periods apply to certain claims, and contracts may contain complaint deadlines. Also read our article on limitation periods for invoices and claims and do not wait too long.

Novex Advocaten is here to help

We draft formal notices, advise on the best remedy for breach of contract and conduct negotiations and proceedings. Also read our article on drafting a formal notice and on the IOS procedure.

Call 0484 99 22 72 or email asfour@novexadvocaten.be.