A B2B (business-to-business) is a civil law contract that regulates the mutual relations between two business entities. In practice, it is most often concluded between sole traders and larger organisations.
Nature of B2B Contracts
B2B contracts fall under the category of “unnamed contracts.” This means that they are not explicitly regulated by civil law provisions, granting the parties significant freedom in shaping their terms. In practice, this means that entrepreneurs can determine the content of the agreement freely, provided its provisions do not violate applicable laws, the nature of the legal relationship, principles of social coexistence, or general legal norms. This flexibility is a significant advantage in business relationships, particularly in rapidly evolving industries such as IT, marketing, or the broader service sector.
Essence of a B2B Contract
The core element of a B2B contract is one party's obligation to provide specific services to the other party, while the latter is obligated to pay remuneration in return. A B2B contract primarily specifies the rights and obligations of the parties, the contract's duration, the place of performance, matters related to remuneration, liability of the parties, penalties for non-compliance, conditions for termination, and confidentiality obligations. Depending on the subject of the agreement, provisions concerning intellectual property rights or non-compete clauses may also be essential.
Advantages of a B2B Contract
A B2B contract offers numerous advantages, making it a popular model for collaboration between organizations and sole proprietors:
- Higher net earnings – The entrepreneur is responsible for their own tax and social security contributions, often resulting in higher income compared to an employment contract.
- Expense deductions – Entrepreneurs can deduct business-related expenses such as equipment costs, fuel, accounting services, or utility bills.
- Work flexibility – No fixed working hours and the ability to organize one's work schedule independently.
- Independence – Entrepreneurs can collaborate with multiple entities simultaneously, increasing potential income and offering greater operational freedom.
Disadvantages of a B2B Contract
However, a B2B contract also comes with certain limitations and risks:
- Lack of protection under the Labor Code – Self-employed individuals under a B2B contract are not entitled to paid leave, protection against dismissal, seniority bonuses, or special protections for pregnant women. All matters related to work organization and financial security rest on the entrepreneur.
- Responsibility for bookkeeping – Entrepreneurs must manage their own tax and social security settlements, which can be complex and time-consuming.
- Full financial liability – Entrepreneurs bear full financial responsibility for improper contract performance, which can lead to severe financial consequences in case of disputes.
- Risk of reclassification as an employment relationship – Under the Labor Code, performing work under supervision, at a time and place designated by the employer, for remuneration constitutes employment, regardless of the contract's name. Thus, if a B2B contract is executed under conditions resembling those of an employment contract, a court may reclassify it as such, with all attendant consequences. Additionally, there has been increasing discussion about granting the State Labour Inspectorate (PIP) the authority to reclassify civil contracts as employment contracts via administrative decisions without requiring a court ruling.
B2B Contract – is it worth it?
B2B contracts are an attractive option for entrepreneurs who value flexibility, the potential for higher earnings, and independence in work organization. However, their use requires caution and an understanding of potential risks. To minimize these risks, it is advisable to seek professional assistance.
If you are interested in comprehensive services related to the verification of B2B contracts, their preparation in compliance with legal regulations, and customization to specific needs, please feel free to contact us.
