Extrajudicial Termination: Without a Judge, With Results!

Gepubliceerd op 27/12/2024

When you enter into a contract, such as a lease agreement or a service contract, you undertake certain obligations. Sometimes, it happens that one of the parties fails to fulfill those obligations. What can you do if the other party does not comply with the agreed terms? In Belgium, Article 5.93 of the Civil Code provides for the possibility of terminating a contract “extrajudicially” in certain circumstances. But what does this mean exactly?

What is an Extrajudicial Termination?

Extrajudicial termination refers to the termination of a contract without the involvement of a judge. This can be advantageous because it is faster and less expensive than judicial proceedings. Essentially, you are telling the other party: “The contract is terminated because you failed to meet your obligations.”

In Cases of Serious Breach

However, a contract cannot be terminated extrajudicially without justification. Given the significant consequences of such an action, an extrajudicial termination is subject to the following conditions:

• There must be a serious breach. This means that the other party has failed to perform a significant obligation under the contract. For example, a supplier delivers goods far too late, or a contractor does not complete the agreed-upon work.
• You must serve the other party with a notice of default. This involves sending a registered letter identifying the breach(es) and providing a deadline for rectification. Only if this deadline passes without resolution can you proceed with an extrajudicial termination.

Step-by-Step Process

If you wish to invoke extrajudicial termination, it is crucial to follow these steps carefully:

• Notice of Default: Send a formal notice (preferably by registered letter) to the other party outlining the breach(es). Provide a reasonable deadline for them to fulfill their obligations.
• Termination Notice: If the other party fails to act within the specified timeframe, send a second letter clearly stating that you are terminating the contract extrajudicially. This is your termination notice.
• Keep Evidence: Maintain all documents and correspondence meticulously. If the other party later disputes the validity of the termination, these documents will help substantiate your position.

Risks of Extrajudicial Termination

While extrajudicial termination can be a convenient solution, it is not without risk. The other party may disagree with the termination and take the matter to court. The court will then assess whether the termination was justified, i.e., whether there was a sufficiently serious breach, whether a notice of default was issued, and whether a termination notice was sent. If the court finds these conditions were not met, you may be held liable for damages resulting from the unlawful termination.

To avoid such risks, it is advisable to seek legal counsel before proceeding with extrajudicial termination. Our team of specialized lawyers can help you assess whether the breach is serious enough and guide you through the various steps.

Feel free to contact us!