Mandatory pre-contractual documentation in Software/App agreements
On 22 August 2022, the French speaking enterprise court of Brussels rendered a decision on the Belgian Act on mandatory pre-contractual information for commercial cooperation agreements (Book X of the Code of Economic Law – the “Pre-Contractual Information Act”) in the framework of an agreement between a software/App-provider and the owner of electric scooters (“e-scooters”) for an e-scooter service.
The e-scooter app enabled users to lease e-scooters in several major cities (the “App”). The App-provider configured and controlled the App, the e-scooter service was operated under the trade name of the App-provider, but the e-scooters were owned by a commercial partner.
To provide the e-scooter service, the App-provider and the e-scooter owner entered into an agreement whereby the e-scooter owner made available e-scooters to the users of the App.
Obligation to provide pre-contractual documentation and potential nullity
For the purposes of the Pre-Contractual Information Act, a commercial cooperation agreement is an agreement whereby one person/entity grants the right to another to use a commercial formula when selling products or providing services, i.e.:
- a common sign; and/or
- a common trade name; and/or
- a transfer of know-how; and/or
- commercial or technical assistance.
The party to a commercial cooperation agreement who receives the right to use the commercial formula (here the e-scooter owner), needs to be provided with certain pre-contractual information one month prior to the conclusion of the commercial cooperation agreement, i.e. (i) the draft of the commercial cooperation agreement and (ii) a separate document with predefined essential information, e.g. the annual accounts, the market share, necessary investments (Artt. X.27-28 of the Belgian Code on Economic Law) (together, the “Pre-Contractual Documentation”).
Failure to provide the Pre-Contractual Documentation will give the user of the commercial formula the right to invoke the nullity of the commercial cooperation agreement up to two years after its conclusion.
Decision and take-aways
In its decision of 22 August 2022, the enterprise court decided that the agreement between the App-provider and the e-scooter owner qualified as a commercial cooperation agreement since:
- the service of providing e-scooters to users was operated under the trade name of the App-provider;
- the software (App) was configured and controlled by the App-provider;
- the owner of the e-scooters had to abide by the general terms and conditions set by the App-provider (including price); and
- the App-provider provided commercial, administrative, and technical assistance to the e-scooter owner.
Considering the qualification of the agreement as a commercial cooperation agreement, the App-provider needed to provide the owner of the e-scooters with the Pre-Contractual Documentation one month prior to the conclusion of the commercial cooperation agreement, which it failed to do.
Failure to (timely) provide the Pre-Contractual Documentation would have allowed the owner of the e-scooters to terminate the commercial cooperation agreement up to two years after its conclusion. However, since the e-scooter owner invoked the nullity a few days after the two-year period, the court refused to confirm the nullity of the commercial cooperation agreement.
Notwithstanding the refusal of the court to confirm the nullity, the following lessons can be learned from this decision:
- (i) software/application providers too need to be aware of the existence of the mandatory Belgian Act on pre-contractual information for commercial cooperation agreements, whereby they need to provide the draft agreement and the separate pre-contractual document one month prior its conclusion; and
- (ii) failure to provide the necessary Pre-Contractual Documentation can lead to nullity when invoked within two years after the conclusion of the commercial cooperation agreement.
Please do not hesitate to reach out if you would have any queries or remarks regarding the implementation of the Belgian Act on mandatory pre-contractual information for commercial cooperation agreements.