Business and corporate law
The knockout rule explained for you
What is it about?
Suppose a client makes a contract proposal to a freelancer and refers to his terms and conditions in his proposal. The freelancer makes a counterproposal and in turn refers to his own terms and conditions. Eventually a contract is made but both parties invoke their terms and conditions. What conditions are applicable now? What about conflicting terms and conditions? The knockout rule explained for you by our partner Forum Lawyers.
The knockout rule on general terms and conditions
Under the new contract law, the legislature settled this discussion for contracts concluded from Jan. 1, 2023. This is because the legislature has introduced the so-called knockout rule(Art. 5.23 new BW).
Possibility of effective perusal of general terms and conditions
This rule starts from the premise that a party’s general terms and conditions are only part of a contract to the extent that the other party had the opportunity to effectively take cognizance of them and also accepted them.
In addition, the law now provides that negotiated terms take precedence over general terms and conditions in case of conflict.
Conflicting provisions are struck down KO
The main innovation is that under the new contract law, a contract can be formed even if offer and acceptance refer to different general terms and conditions. Both general terms and conditions form part of the contract, except for the incompatible clauses. These incompatible (or conflicting) terms are “knocked out” of the contract (hence the name “knock out rule”).
If a party wishes to deviate from this rule, it must expressly indicate in advance or without undue delay after receiving acceptance (and therefore not by general terms and conditions) that it does not wish to be bound by such a contract.
Do you still have questions about this new legislation or are you hesitant to apply the new contract law to your contracts now? Then be sure to contact our partner Forum lawyers their specialists in contract law so they can provide you with tailored advice.