An brewery contract lays the foundation for a partnership that ideally will last for years, if not decades. It is an agreement built, in theory, on mutual trust and cooperation. But in any long-term business relationship, especially one so complex and financially intertwined, friction can arise. The hospitality industry is a dynamic environment facing rising costs, changing regulations and unforeseen challenges, as the COVID-19 crisis demonstrated.
What happens if market conditions change drastically? What if, despite all your efforts, you cannot possibly meet your minimum volumes? Or what if the brewery itself does not fulfill its promises of support, delivery or maintenance?
When a conflict escalates, the hard legal clauses of the contract surface. It is a misconception to think that as a hospitality operator in Belgium you will always get the short end of the stick. Both classic contract law and recent modern legislation (such as Book 5 of the Civil Code) offer a range of defenses, remedies and solutions.
Below we analyze what happens when things go wrong. We discuss what exactly constitutes a breach of contract (default), what defense mechanisms you have, what sanctions are available, and how to concretely resolve a dispute, both in and out of court.
The source of the conflict: the breach of contract ( attributable failure to comply)
A conflict almost always begins with a breach of contract: one party fails to fulfill its commitments, or fails to do so on time or in full. This is legally called a “an attributable failure to comply”. It is crucial that this break can be attributed to the party (it is her ‘fault’).
A fundamental concept here is the distinction between an effort commitment and a result commitment.
- An effort commitment requires only that you do “everything possible,” like a prudent and reasonable person, to achieve a goal.
- An result commitment requires that the promised result is actually achieved.
The importance of this cannot be overemphasized: the minimum beverage purchase obligation is almost always considered an obligation of result. Simply failing to meet the quota is sufficient to establish a breach of contract, regardless of how hard you have tried.
Of course, a breach of contract can come from either side.
Breach of contract by the hospitality operator (the buyer)
This is the scenario breweries are most apprehensive about. The typical examples are:
- Violation of exclusivity: You purchase beverages (covered by the contract) from a competing brewer or beverage dealer.
- Non-attainment of minimum volume: The agreed quota (the result commitment) is not met at the end of the reference period.
- Non-payment: Failure to pay (on time) for drinks delivered, rent on the premises, or loan repayments.
- Other breaks: Failure to properly maintain the loaned equipment, subletting the property without permission , or performing prohibited renovations.
2. Breach of contract by the brewery (the supplier/landlord).
The brewery can also violate its obligations. Examples are:
- Non-timely or incorrect deliveries: You are dry during a busy weekend, or wrong products are routinely delivered.
- Failure to keep financial promises: The promised ‘fonds perdu’ or loan is not paid (in full) or is paid late.
- Lack of maintenance (as a lender): The brewery is failing to repair the tap system it loaned, which means you can't tap beer.
- Breach of landlord duties: As a landlord, the brewery fails to make necessary major repairs to the property (e.g., a leaking roof), causing you damages.
Your defense: can you invoke force majeure or hardship?
When you are sued for a breach of contract (e.g., failing to meet your quota), you do not always have your back against the wall. You must act in good faith at all times, which means being loyal and reasonable, but the law also provides specific defenses.
1. Force majeure (circumstances beyond one's control).
Force majeure releases you from liability. You must then prove that the non-performance is the result of an event that:
- Was unforeseeable at the conclusion of the contract;
- Was inevitable was (you couldn't do anything about it);
- Makes the implementation of the commitment (temporary or permanent) impossible not merely more difficult or expensive.
- The textbook example: The COVID-19 pandemic and the government-mandated closure of the hospitality industry. It was literally impossible to purchase beverages. The industry even concluded specific addenda to the code of conduct for this purpose to neutralize the impact on quotas.
- What is not force majeure? Roadworks on your doorstep, a general economic crisis, bad weather or increased competition are usually considered normal, foreseeable business risks and not as force majeure.
2. Hardship (change of circumstances).
This is a recent and powerful tool in the new Book 5 of the Civil Code. Hardship is milder than force majeure and applies when unforeseen circumstances make performance of the contract not impossible, but excessively burdensome, to the point that it would be unreasonable to require unaltered performance.
- Prerequisites: 1) The circumstances were unforeseeable at contract conclusion, 2) You have no stake in the change, 3) Performance has become disproportionately burdensome .
- Example: A sudden and prolonged ban on outdoor cafes in your city that structurally halves your sales potential, or an unforeseen energy crisis that triples your fixed costs, completely evaporating profits per hectoliter.
- What can you do? You have the right to request renegotiations from the brewery. If the brewery refuses or negotiations fail, you can ask the court to modify the contract (e.g., temporarily reduce the minimum volume, adjust the price) or even terminate all or part of it.
The possible sanctions: what can the plaintiff claim?
If the breach of contract is established and there is no force majeure, the aggrieved party (the ‘creditor’) has a choice between several sanctions.
1. In-kind performance
This is the basic principle in Belgian law: the creditor can demand that the other party do exactly what was promised. The brewery can force you through the courts (under penalty) to only purchase from it, or you can force the brewery to repair the tap installation.
2. Repair of damages (compensation).
The most common sanction. If in-kind performance is no longer possible or desired, damages are converted to cash. The goal is to put the creditor in the position he would have been in had the contract well been carried out correctly.
- The damage clause (penalty clause): Brewery contracts are full of this. The contract specifies in advance a flat penalty for each breach (e.g., “€150 per hectoliter not taken”).
- Dual protection: You are doubly protected against this:
- Mitigation: A judge may moderate (reduce) a damages clause that is “manifestly unreasonable.”.
- B2B law: As we discussed on this page , a disproportionate damages clause may be on the ‘gray list’ and be declared by the court as unlawful and thus void in its entirety.
3. The dissolution of the contract
This is the most drastic sanction, reserved for sufficiently serious defaults. The court (or the party itself under conditions) terminates the contract.
- Methods: This can be done through the courts (judicial dissolution), through an express termination clause in the contract (it must be very clear), or through notice by the creditor (a new, strict procedure).
- Consequences: Disolution puts an end to the contract. This leads to refund: performance must be undone. The loan is repaid early, the ‘fonds perdu’ must be returned (pro rata), and the equipment must be returned. If a lease is involved, this leads to eviction.
4. Price reduction
A new and useful sanction from the Civil Code. If the brewery's delivered performance is faulty (e.g., systematically late delivery, wrong products), as an operator you can demand or enforce a proportional price reduction via written notice.
5. The creditor's right of choice
Crucially, the creditor (the party aggrieved) basically has the right of choice between these sanctions. The brewer can choose between forcing you to continue taking delivery (performance) or requesting the dissolution of the contract (plus damages). This right of choice is limited only by the prohibition against abuse of rights (you may not choose a sanction that is manifestly unreasonable).
The competitor trap: third-party complicity
What if a competing brewer actively persuades you to break your current contract? This competitor should be very careful. If the competitor knew (or should have known) that you were bound by an exclusive contract, and yet knowingly cooperate in the breach of contract, he commits ‘’third-party complicity in breach of contract'.
As a result, your original brewery can not only sue u for damages, but also the competitive brewer (on an extra-contractual basis). Both may then be jointly and severally liable for the entire damage.
How to resolve a dispute. Two official tracks
If you cannot reach a mutual agreement, there are two official routes for resolving a dispute.
Track 1: The Reconciliation Committee Beverage Purchase Agreements.
This is the approachable and highly recommended first step. This committee was established under the ‘Code of Conduct‘ for the sector.
- Advantages: The procedure is informal, quick and inexpensive. You don't have to file an expensive lawsuit right away. The committee consists of people with knowledge of the industry, and the goal is reconciliation, not condemnation.
- Procedure: The procedure is laid down in specific regulations.
- Disadvantage: The committee gives a non-binding opinion. If the brewery disregards the opinion, you must still go to court. In practice, however, an opinion is often followed.
Track 2: The court
This is the formal and binding route. Which court has jurisdiction depends crucially on the nature of your contract.
- If the dispute concerns the RENTAL of the premises: If the conflict is (even partially) about the commercial lease (e.g., rent, notice, renewal, eviction, renovations), the PEACE JUDGE of the place where the property is located has exclusive jurisdiction.
- If it is a ‘pure’ brewery contract (without rent): If the dispute is only about liquor purchases, invoices, loans or claims, the ENTERPISE COURT has jurisdiction, since it is a dispute between companies.
This distinction is of crucial strategic importance. Bringing a case to the wrong court results in wasted time and additional costs.
Conclusion: don't wait for it to escalate
A conflict with your brewery is complex and can threaten the viability of your business. However, the legal mechanisms in Belgium are much more nuanced than is often thought. Invoking force majeure or the new hardship doctrine can be a realistic defense, the rules on B2B contracts can dump unfair penalties, and the Reconciliation Committee offers a valuable alternative to expensive litigation.
It is crucial not to wait and see when a dispute arises, but to proactively seek legal advice on your precise rights and obligations. A proper analysis of the default and your potential defenses determines the strategy.
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