In the ever-evolving landscape of data regulation, the EU Data Act stands as a pivotal milestone. Beyond its wide-ranging data access provisions, the Data Act introduces a comprehensive framework to tackle unfair contractual clauses in business-to-business (B2B) relationships. In this blog post, we delve into which clauses qualify as unfair, identify the contracts in scope, and discuss how businesses can best prepare. Buckle up for a journey through the intricacies of contract law in the digital age.
Spotting unfair clauses…
Strict rules on unfair terms in business-to-consumer (B2C) relationships have a long tradition (not only) at European Union level. While the EU already has some rules for B2B relationships, they have mainly targeted specific issues such as delayed payments in commercial transactions, or have banned certain clauses in narrowly defined areas, such as unfair trading practices in B2B relationships in the agricultural and food supply chain.
The Data Act’s innovation is to comprehensively address ‘unfair contractual terms’ in the B2B context across all industry sectors. The respective rules cover all types of contracts (such as supply agreements, collaboration agreements, service agreements, data sharing agreements, license agreements, etc.), but specifically apply to contractual clauses concerning the access to and the use of data (including liability and remedies for the breach or the termination of data-related obligations). These rules apply to all types of contracts, regardless of whether they are part of complying with Data Act requirements.
The Data Act introduces an unfairness test for (almost all) contractual clauses related to data (except for contractual clauses that determine the main subject matter of the contract or the appropriateness of the price). Such contractual clause is not binding for a party, if it is (i) unfair and (ii) has been unilaterally imposed on such party. In addition to the consequences a non-binding clause can entail, authorities might impose administrative fines for non-compliance with the Data Act’s unfairness principles. Other clauses of the same contract, with no connection to making data available, are not subject to the unfairness test, though. Where an unfair contractual term is severable from the remaining terms of the contract, those remaining terms shall be binding.
Is that clause playing fair?
The Data Act’s unfairness test comprises three layers:
First, there is a ‘black list’ of contractual terms that are deemed unfair in any case, as they unfairly favour the party with the stronger bargaining power, ie the party that unilaterally imposed the relevant clause. Examples of such ‘unfair clauses’ include the exclusion or limitation of liability for intentional acts or gross negligence or the exclusive right to determine whether the data supplied are in conformity with the contract.
Second, it includes a ‘grey list’ of clauses that are assumed to be unfair unless the party that imposed the relevant clause can prove otherwise. Examples include the inappropriate limitation of remedies in the case of non-performance of contractual obligations or inappropriate termination periods for the party upon whom the term has been unilaterally imposed.
Third, besides the ‘black list’ and the ‘grey list’, there is a general clause that bans unfair contractual terms if they have such characteristics that their use (i) departs significantly from good commercial practice in data access and use and (ii) they violate good faith and fair dealing.
The general unfairness test on the third level of the unfairness assessment only contains vague wording, which will make it difficult for businesses to evaluate whether their clauses pass the unfairness test. Nevertheless, one can assume that a ‘gross deviation from good commercial practice in data access and use’ would mean, in practice, that the party on whom the clause was unilaterally imposed is objectively impaired in its ability to protect its legitimate commercial interests in the data in question. Further, one can assume that a contractual term would comply with the requirement of ‘good faith and fair dealing’ if the company using the contractual term could reasonably expect, on the basis of its loyal and fair conduct towards the contractual partner, that the contractual partner would agree to the general concept of a clause after individual negotiations.
When assessing whether a clause passes the unfairness test, businesses should consider the Data Act’s overarching goal: eliminating excessive contractual terms where a dominant party exploits a stronger negotiating position. In contrast, market-standard B2B terms, often favoring one party, should remain permissible as a manifestation of contractual freedom.
In this context, the contractual clauses listed in the grey list, along with the non-binding model contractual terms for B2B data sharing contracts, currently being developed by the European Commission, may serve as a benchmark for interpreting the general unfairness provision.
One sided moves - unilateral imposition of clauses
The clause in question must also be unilaterally imposed on the other party in order to be considered unfair. This refers to scenarios where one company dictates a specific contractual term, and the other company has no power to change that term even after trying to negotiate. Interestingly, the Data Act is very clear that contractual clauses introduced by one party, but not challenged by the other party, are not deemed to be ‘unilaterally imposed’. So, the Data Act’s fairness requirement benefits a company only if it actively seeks to modify the individual clauses of the other contracting party. If a company does not engage in any negotiation regarding the clause, the unfairness test is not applicable, and consequently, it cannot claim that the Data Act’s unfairness requirements have not been met. If there is a dispute, the one who provided the contractual term bears the burden of proof that it has not been unilaterally imposed. Moreover, the contracting party that provided the disputed contractual term may not argue that the term is an unfair contractual term.
What can businesses do to get ready?
One should be aware that the Data Act’s unfair clauses rules affect not only new contracts (concluded after September 12, 2025) but also current contracts. The latter are in scope if they are of indefinite duration or have a remaining contractual term going beyond 11 January 2034. Likely, also contracts that automatically renew for additional terms (eg an initial five-year contract with automatic two-year renewals unless terminated by one party) may be considered to be of ‘indefinite duration’ and thus fall with the scope of the Data Act’s unfair clauses rules. While existing contracts will benefit from a grace period, allowing businesses until September 12, 2027, to adjust their clauses, businesses are well advised to double-check their current contracts to ensure that those to not contain ‘unfair clauses’ within the meaning of the Data Act.
Moreover, businesses should keep in mind the current national laws on unfair clauses which might serve as a valuable reference point alongside the Data Act’s generic principle when assessing contractual fairness.
Ultimately, it will be up to the courts to set out the interpretative boundaries of the requirements of Data Act’s unfairness test. The meaning of ‘unfair’ clauses will become clear over time. In the meantime, businesses need to prepare and - until there is a consistent decision practice across the EU - decide between a safer strategy or a more daring one when proposing and negotiating data-related obligations.
