Retention of title in Dutch commercial law: how suppliers secure payment

A retention of title is the simplest and cheapest security a supplier has under Dutch commercial law: the seller stays the owner of the goods until the buyer has paid. Dutch law recognises it in article 3:92 of the Civil Code (Burgerlijk Wetboek), but on narrower terms than suppliers from other jurisdictions expect, and it only helps if the clause was agreed before delivery and the goods are still identifiable. This article sets out how retention of title works in the Netherlands, what it cannot do, and which other instruments close the gap.

Where payment security sits in Dutch commercial law

Commercial law is the body of rules that governs how businesses buy, sell, finance and deliver goods and services. In the Netherlands it rests on Books 3, 6 and 7 of the Civil Code, on EU legislation for consumer and online trade, and on the CISG for cross-border sales of goods unless the parties exclude it. Within that body of rules, the part that decides whether a business survives a bad debtor is narrow and technical: who owns what, in which order creditors rank, and how quickly a claim can be enforced.

Every supplier who delivers before being paid is extending credit, whether or not anyone calls it that. Payment terms, security and enforcement therefore belong in the contract from the outset and not in a collection letter afterwards. The practical questions are always the same. Can I get my goods back. Do I rank ahead of the bank. How long do I have. What Dutch law offers in answer is a small set of instruments, each with its own conditions and each with a deadline that runs quietly in the background.

Retention of title: what article 3:92 BW allows

A retention of title (eigendomsvoorbehoud) is construed in Dutch law as a transfer of ownership subject to a suspensive condition. The goods are delivered and the buyer may use them, but ownership passes only when the condition, payment, is fulfilled. Until then the seller can reclaim them from the buyer, and from a trustee in bankruptcy.

The catch is in the second paragraph of article 3:92. A retention of title may validly be stipulated only for a limited set of claims:

• the consideration for goods the seller has delivered or will deliver to the buyer under the contract or a similar contract;
• the consideration for work carried out or to be carried out for the buyer under such a contract;
• claims arising from the buyer failure to perform such contracts.

Anything wider is invalid. An all-monies clause that secures every claim the seller or any group company may ever have against the buyer, which is standard drafting in several neighbouring jurisdictions, does not survive translation into Dutch law. Only the offending reservation falls away; the rest of the contract stands. Suppliers who use a group-wide template should have the clause checked against article 3:92 rather than assume it travels.

Two further conditions decide most cases. The clause must have been agreed no later than the moment of delivery, so a retention of title that first appears on the invoice is too late. And if it lives in your standard terms, those terms must have been validly incorporated and made available; our article on why copying general terms and conditions costs you dearly explains what goes wrong there.

Where a retention of title stops working

Reserved ownership is lost the moment the goods stop being the goods you delivered. If your steel is welded into a machine, your resin is mixed into a compound or your components are built into a product, Dutch property law treats the result as a new or a composite thing, and your ownership disappears into it. The same happens when the buyer resells to a third party who acquires in good faith: the buyer had the power to dispose of the goods in the ordinary course of business, and your claim against the buyer is all that remains.

The extended retention of title used elsewhere in Europe, which follows the goods into their proceeds or into the manufactured product, has no equivalent in Dutch property law. Trying to draft one produces a clause that is either void or simply ineffective against a trustee. The correct answer is a different instrument, and it has to be put in place in advance.

There is also a cross-border trap. Whether ownership has been validly reserved is judged by the law of the country where the goods are situated at the relevant moment, not by the law the parties chose for the contract. A German supplier whose contract is governed by German law, delivering into a Dutch warehouse, is assessed under Dutch property rules. The CISG deliberately leaves property effects alone, so choosing it changes nothing here.

The right of reclamation: a second chance at the goods

Dutch law gives an unpaid seller of movable goods a second route, the recht van reclame in article 7:39 of the Civil Code. By a written notice the seller dissolves the sale and recovers ownership of the goods delivered, provided they are still with the buyer in essentially the state in which they were delivered and the buyer is in default. It is a statutory right: it works even where nobody remembered to agree a retention of title.

The reason it is so rarely used is the deadline. The right lapses once both six weeks have passed since the claim for the price became due and sixty days have passed since the goods were stored with the buyer. Those periods run in parallel and they are strict, so a supplier who spends three months on reminders before calling a lawyer has usually lost the right without knowing it existed. When a customer starts missing payments on delivered stock, the reclamation clock is the first thing to check.

Pledges over receivables, stock and equipment

Where a retention of title runs out, a pledge (pandrecht) takes over. A non-possessory pledge over receivables is created by a notarial deed or by a private deed registered with the tax authority, and it can be renewed periodically to catch new receivables as they arise. Until the pledgee notifies the debtor, the pledge stays undisclosed and the buyer keeps collecting; once notice is given, the pledgee collects directly. A pledge can equally be taken over stock and equipment.

The advantage in insolvency is decisive. A pledgee is a separatist and may enforce as though there were no bankruptcy, although the trustee can set a reasonable period after which the trustee takes over the sale. There are two limits worth knowing before relying on it. Banks usually hold a first-ranking pledge over the same assets, so a supplier is often taking second rank over an already encumbered pool. And the Dutch tax authority holds a bodemvoorrecht over assets located on the debtor premises, which outranks a non-possessory pledge over machinery and equipment standing there. Neither point makes a pledge pointless; both mean it should be priced and negotiated with open eyes.

For higher-value or longer-running relationships, a bank guarantee, a parent company guarantee or a suretyship (borgtocht) does something a pledge cannot: it adds a second solvent party rather than a claim on the same failing one. Our overview of types of commercial agreements sets out where each of these normally sits.

Payment terms, statutory commercial interest and recovery costs

Between businesses the default payment term under the Civil Code is thirty days from receipt of the invoice. Parties may agree a longer term, but a term of more than sixty days is valid only if it is not manifestly unfair to the creditor, and since 1 July 2022 a large company contracting with a small or medium-sized supplier may not agree a payment term longer than thirty days at all. A longer term in such a contract is converted to thirty days by operation of law, and statutory commercial interest runs from the day after that period expires.

Statutory commercial interest is set by the legislature and adjusted twice a year, so it belongs in a contract as a reference to the statutory rate rather than as a number. It runs automatically on a late business payment; no reminder and no notice of default is needed to start it. Reasonable costs of out-of-court collection can be recovered as well. In consumer contracts the amount is fixed by regulation and cannot be increased; between businesses the parties are free to agree their own arrangement, which makes a short, explicit costs clause worth having.

What happens when the buyer becomes insolvent

Bankruptcy is where the choices made months earlier are settled. A valid retention of title survives the bankruptcy: the goods are yours, not the estate. But the trustee (curator) can invoke a cooling-off period of up to two months, extendable once by the same period, during which third parties may not remove their goods without the supervisory judge permission. Your claim is not lost; your access to it is suspended, and the goods keep depreciating.

Practically, three things decide whether a supplier gets anything. Whether the goods can still be identified as yours, which is a matter of numbering, labelling and delivery records rather than of law. Whether you assert your rights immediately and in writing to the trustee. And whether the trustee proposes to continue the business, in which case a commercial arrangement, for instance continued use against payment, is often better than a legal battle over stock that will be worth less by the time it ends. Our article on the bankruptcy of your contract partner works through the sequence in more detail.

Enforcing payment before it gets that far

Long before insolvency, Dutch law gives a supplier levers that are underused. Performance can be suspended where the other party fails to perform, which for a supplier means stopping the next delivery rather than financing a debtor further. A contract can be dissolved for breach, in most cases after a written notice of default that sets a reasonable period for performance; where a fatal deadline has been agreed, default arises automatically once that date passes. Both steps should be taken in writing and in the right order, because a supplier who stops delivering without a proper basis becomes the party in breach.

If the debtor is solvent but unwilling, a pre-judgment attachment (conservatoir beslag) is the sharpest instrument in Dutch practice. Leave is requested from the preliminary relief judge, usually granted on the papers and often within a day, and the attachment freezes bank accounts, receivables or goods before the debtor knows a claim is coming. Proceedings on the merits must then be started within the period the court sets. Our article on asset freezing and pre-judgment attachment explains the procedure and its risks, because a wrongful attachment carries a liability of its own.

What to put in your contract now

Four provisions do most of the work. A retention of title drafted to the limits of article 3:92 rather than copied from a foreign template. A payment clause that states the term, refers to the statutory commercial interest and deals with collection costs. A security clause that entitles you to demand a pledge, a guarantee or advance payment if the customer credit position deteriorates. And a clear incorporation of your general terms, because the best clause in the world is worthless if the terms were never validly agreed.

None of this is where commercial law ends. It also governs how a deal is formed, how liability is capped, how distribution and agency relationships are structured and terminated, and what changes when a consumer is on the other side. Those transactional questions sit with our contract lawyers, while questions about the entity itself, its shareholders and its directors belong to corporate law and to our business lawyers.

Law and More drafts and reviews supply, distribution and standard terms for businesses trading in and with the Netherlands, and acts for suppliers who need to recover goods or money quickly. If you are delivering on credit and are not sure your security actually works under Dutch law, contact Law & More for a straight assessment.