1.  In respect of existing business-to-business (B2B) agreements that do not contain an explicit price adjustment clause:
    1. a. Is the supplier permitted to unilaterally increase prices (or does it have other rights regarding price increases)? If so, to what extent?
    2. b. Do (extreme) price increases give the customer the right to terminate the agreement? If so, are there any specific rules or regulations to comply with?
  2.  In respect of future B2B agreements:
    1. a. Is it permissible to include an explicit price adjustment clause in the agreement? If so, what price adjustment clauses typically exist in your jurisdiction?
    2. b. What legal issues need to be considered (if any) to ensure that the price adjustment clause is enforceable? Is there any key legislation or case law that parties should be aware of regarding enforceability of price adjustment clauses in your jurisdiction?
    3. c. Are there any other issues that parties should consider when formulating a price adjustment clause (e.g. any sector-specific regulation)?
  3.  Do any additional considerations or rules apply to the inclusion of price adjustment clauses in business-to-consumer (B2C) agreements?

jurisdiction

Bulgaria
Add jurisdiction

1. In respect of existing business-to-business (B2B) agreements that do not contain an explicit price adjustment clause:

a. Is the supplier permitted to unilaterally increase prices (or does it have other rights regarding price increases)? If so, to what extent?

The supplier is not permitted to unilaterally increase prices unless the parties have agreed initially (in their agreement) or subsequently (in an annex) that he will be entitled to do so.

If the supplier’s unilateral price-increasing right is specified in the supplier’s general terms (rather than in the individual agreement/annex) the customer must have accepted the general terms in writing, unless the customer was himself a trader and knew or ought to have known the general terms and did not immediately contest their application.

However, the supplier is entitled to claim an adjustment of the prices in certain cases (when the agreement does not contain an explicit price adjustment clause), namely:

  1. Pursuant to Art. 307 of the Bulgarian Commerce Act 1  a party to an agreement may ask the court to amend certain contractual terms (e.g. to amend the price), on the basis of the so called ‘business frustration’, namely if such circumstances occurred following the signing of the agreement, that the parties could not and were not obliged to foresee and if the preservation of the original agreement terms would be contrary to fairness and good faith.
  2. In civil transactions the assignee is allowed to demand a change of the initially defined price under a workmanship agreement in cases where the prices of the materials or the employed labour force have changed in the course of the execution of the agreement.

b. Do (extreme) price increases give the customer the right to terminate the agreement? If so, are there any specific rules or regulations to comply with?

As noted, the unilateral price increase option has to be agreed upon mutual consent. Otherwise, a party which has amended prices unilaterally would be in default of the agreement. The default would most likely entitle the counter-party to terminate the agreement.

2. In respect of future B2B agreements:

a. Is it permissible to include an explicit price adjustment clause in the agreement? If so, what price adjustment clauses typically exist in your jurisdiction?

Yes. The typical example is a price indexation clause. This is a clause under which the ultimate amount of the price under an agreement is either specified (but subject to an agreed % indexation) or determinable (not fixed in the agreement and instead depending on given indexation criteria). The price-indexation must specify the applied indexation mechanism and enumerate the exact indexation criteria.

The enforceability of the price adjustment clause will depend on whether it was validly agreed to in the contract and if the clause was sufficiently clear – that is, if the adjustment method and conditions were clearly outlined.

c. Are there any other issues that parties should consider when formulating a price adjustment clause (e.g. any sector-specific regulation)?

Price adjustment clauses must be as specific as possible and must specify the exact price-adjustment mechanism and in what conditions the adjustment right can be triggered.

The Bulgarian Public Procurement Act contains an example of a sector-specific, inflation-related price amendment rule. The rule applies only in specific public procurement cases. The possibility to amend the contract price as a result of inflation (due to substantial increase of prices of essential goods/materials), shall be determined according to a methodology approved by the Bulgarian Council of Ministers. The methodology currently regulates/applies to solely two types of public procurement contracts: (i) construction contracts, and (ii) supply contracts for sector activities related to natural gas, heat, and electricity.

3. Do any additional considerations or rules apply to the inclusion of price adjustment clauses in business-to-consumer (B2C) agreements?

Price adjustment clauses are more rigidly regulated in B2C agreements.

As a rule, the seller has to inform the consumer about the ultimate price of the product/service prior to the conclusion of the sales agreement. The ultimate price includes all applicable taxes and fees, as well as transportation and postage costs, if applicable (to the extent possible for these to be precisely calculated, or at least mentioned). The consumer has to have explicitly accepted the price for the agreement to be valid.

The seller’s right to unilaterally increase the price will be valid if it was individually agreed with a consumer under the sales agreement and such agreement explicitly gives the consumer the right to terminate the contract if the price is substantially increased in comparison to the initially agreed price. The seller will bear the burden to prove that the unilateral price-increasing clause was individually agreed (and was not part of the seller’s general terms). The clause: (i) has to be as specific as possible about the price-increasing conditions, and (ii) must not result in a substantial increase of the price without ensuring the right of the consumer to cancel the agreement (otherwise, the price-increasing clause might be considered an ‘unfair consumer clause’ pursuant to Art. 143 of the Bulgarian Consumer Protection Act 2  and will be automatically null and void). Even if the clause does not meet the two criteria under the preceding sentence, it can still be valid as long as the seller manages to prove that the clause was individually negotiated with the consumer and the latter explicitly approved it prior to the signing of the agreement.  

Price-indexation clauses are also permissible in B2C agreements. Such clauses must contain a clear and detailed specification of the indexation method applied and must be accepted by the consumer as part of the agreement.