Book 5 of the new Belgian Civil Code (CC) will embed (not very?) new rules on contract termination. In this article, we discuss the novelties that Book 5 entails regarding extrajudicial termination due to breach.
Even without a termination clause, it was already possible to end a contract extrajudicially due to a serious breach. This option had already found its way to the Belgian law system through jurisprudence and doctrine.
Termination by creditor notice
This concept is now introduced in a statutory provision as the “termination by creditor notice” under article 5.93 of the CC. In case of a serious breach by the debtor, the creditor can end the agreement with simple written notice. An explicit termination clause is not required. The intervention of the court is not necessary either.
So far so good, nothing much new. However, the CC eased the requirements for a party to terminate lawfully. Before, the serious breach had to be accompanied by exceptional circumstances and urgency. It had to be clear that court intervention was already useful and quick action was required, due to the seriousness of the debtor’s breach.
This is no longer the case. A simple written notice, indicating the shortcomings that justify the termination, will do. Previously, the creditor would have to send a notice of default to the debtor. This notice had to include an ultimate opportunity to remedy the flaws.
In case a discussion arises on the lawfulness of the termination, the parties may address the court for a posteriori judicial review. The court shall then verify whether the nature of the breach was of the kind to justify a termination. It will also check whether the terminating party did not abuse her right to end the contract as this would go against the principle of good faith.
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Laura Van Gompel
Lawyer – Managing Partner
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