In addition to the new sale and lease regimes, Book 7 of the Civil Code also contains a thorough reform of the rules on contracts for work, mandate and bailment. Below, we explain a number of important changes and key considerations.
A new central concept: the service contract
Book 7 of the Civil Code introduces the service contract as an overarching concept whose object may be both material and intellectual services, and that is subject to generally applicable rules.
For certain types of service contracts, special rules nevertheless continue to exist. For mandate contracts, for example, the presumption remains that the parties intended the contract to end upon the death, incapacity or insolvency of the principal. Book 7 of the Civil Code also provides for a specific regime for service contracts regarding immovable goods.
Alignment with sale: conformity and warranty against eviction
By analogy with the new rules on sale and lease, the concept of conformity is also introduced for service contracts. This means that the service provider must perform the services in accordance with the contractual provisions and the reasonable expectations of the client.
The time limits are also aligned with the new sale regime. From now on, the following apply: a conformity period of ten years, a notification period of a reasonable time after discovery, a limitation period of two years and a forfeiture period of ten years and three months.
Unlike in sale, the obligation to perform in conformity in service contracts is not a warranty obligation. The service provider is only liable in the event of an attributable non-performance (such as a fault).
In addition, the warranty against eviction, traditionally associated with the law of sale, also applies to service contracts. The service provider may consequently, under certain conditions, be held liable where the client is disturbed in its use or enjoyment of the result of the service by the service provider’s own act or by acts of third parties, insofar as such eviction is attributable to the service provider.
Transfer of risk and ownership clarified
Under current law, there is debate about the point in time at which ownership is transferred in service contracts, particularly in the construction sector. Book 7 of the Civil Code provides a general regime for all service contracts.
Depending on the nature of the assignment, the transfer of ownership takes place at different points in time:
- in the case of the manufacture or construction of an asset, ownership passes at the moment of acceptance;
- where the service provider uses its own materials that are incorporated into an asset already owned by the client, ownership of those materials passes as and when they are incorporated into that asset.
Risk, as in sale, passes upon delivery.
Codification of the obligations of the client and the service provider
Book 7 of the Civil Code largely codifies the obligations of the client and the service provider as already developed today in case law and legal scholarship.
The law thus enshrines the duty of cooperation between the service provider and the client and the duty to inform incumbent on both parties. Under Book 7 of the Civil Code, a duty of cooperation also applies between different co-contractors. In that case, the duty of coordination rests with the client. The law now also contains an express safety obligation on the part of the service provider.
The client, in turn, is obliged to give instructions and to provide for authorisations and permits. This obligation is, however, limited to instructions, authorisations and permits that the service provider can reasonably expect and that are necessary for the performance of the assignment.
The parties nevertheless remain free to further specify, refine or derogate from these obligations by contract.
Codification and broadening of the scope of existing legal concepts
Several well-known legal concepts in construction law are extended to all service contracts.
The doctrine of unforeseen circumstances (‘sujétions imprévues’) now applies to all fixed-price service contracts. On this basis, the service provider has the right to demand renegotiation (and even to bring proceedings before the court) in the event of circumstances that existed at the time the contract was concluded but come to light only afterwards. In line with the doctrine of hardship, the service provider may apply to the court if those renegotiations are not brought to a successful conclusion, and the court may revise the contract or even terminate it.
The broad scope of the direct action of subcontractors (now ‘auxiliaries’) is likewise enshrined and extended to all service contracts.
Under the new rules, the client in a fixed-term service contract still has a unilateral right of termination.
Specific rules for service contracts regarding immovable goods
For service contracts regarding immovable goods, Book 7 of the Civil Code contains a number of specific provisions. These apply to all contracts relating to the construction, conversion or demolition of immovable structures (or significant parts thereof). This may involve both material and intellectual services.
For residential construction, the Act of 9 July 1971 ("Wet Breyne") remains applicable. A reform of this Act, possibly involving its integration into the new Civil Code, is nevertheless still on the agenda. A precise timetable is not yet known.
The impact of Book 7 of the Civil Code on service contracts regarding immovable goods should not be underestimated:
- The law now sets out the framework for provisional and final acceptance. Provisional acceptance is the taking of delivery, and final acceptance is the approval. The parties are, however, free to derogate from this by contract.
- The ten-year (decennial) liability is, for its part, transformed into liability for stability-threatening conformity defects.
In this way, the legislator aligns decennial liability with the concept of conformity. In substance, however, this special liability remains largely the same and continues to apply to non-conformities that affect or threaten to affect the stability or solidity of a building. With regard to the time limits, two periods must be taken into account: (i) the stability-threatening conformity defect must come to light within ten years from acceptance, and (ii) the client must bring an action on the merits within ten years and three months from acceptance. In line with recent case law of the Court of Cassation, the legislator provides that this special liability also applies before acceptance.
As this liability is a matter of public policy, any contractual limitation of it is excluded. The parties may, on the other hand, extend the liability regime.
