Drafting contracts in the Netherlands: what the law requires

Drafting contracts in the Netherlands is governed by Book 6 of the Dutch Civil Code, which requires only an offer and its acceptance for an agreement to come into being. There is no general requirement of writing, no notarial form for ordinary commercial deals and no consideration requirement. What the Code adds is a standard that overrides the text: every contract is supplemented and, where necessary, limited by reasonableness and fairness, so a clause that is unacceptable in the circumstances can be set aside even though both parties signed it.

What makes a contract binding under Dutch law

A contract is formed by an offer and its acceptance, and the underlying test is whether the parties reached agreement (wilsovereenstemming) on the essential points. Dutch law looks not only at what each party actually intended but at what each was entitled to understand from the other’s words and conduct. That objective element is why a party who signs without reading is usually bound, and why an internal reservation that was never communicated is usually irrelevant.

Form is free. An agreement concluded by email, in a chat message or by conduct is as binding as one signed in ink, and an electronic signature is valid, with the level of assurance affecting only how easily it can be proved. Writing is required in a limited number of cases, and those cases matter because the sanction is usually nullity: the non-compete and the probationary clause in an employment contract, the purchase of a home by a consumer buyer, and a small number of other statutory exceptions.

The two limits on freedom of contract are worth stating precisely. A contract whose content or purpose conflicts with mandatory law, public order or good morals is void. And under the Civil Code, what parties owe each other is determined not only by the agreed text but by statute, usage and the requirements of reasonableness and fairness, which both fill gaps and, in exceptional cases, block reliance on a clause that was validly agreed. That second, limiting function is applied restrictively by the courts, but it is real: it is the reason a broadly drafted exoneration clause is not the end of the discussion.

What every agreement needs

The negotiation stage is already a legal relationship

Dutch law attaches obligations to the period before signature. Parties who negotiate enter a relationship governed by reasonableness and fairness, and breaking off negotiations can, in exceptional cases, be unlawful. The established line in the case law is that a party is in principle free to walk away, but that this freedom can be lost where the other party could legitimately expect that some contract would result, or where breaking off would be unacceptable for other reasons; in that situation the disappointed party may recover its costs and, in the most extreme cases, its lost profit.

Two practical consequences follow. First, put the status of the discussions in writing. A term sheet or letter of intent that states in terms that no binding agreement arises until a definitive contract is signed, and that each party bears its own costs, will normally be respected. Second, be careful with the word agreed. An email confirming that the parties are agreed on price, scope and start date can already be a contract, with the remaining points to be settled by supplementary law, whatever the parties intended to sign later.

The same period carries information duties. A party that knows something it should realise is decisive for the other side, and stays silent, risks a later annulment for mistake (dwaling), which unwinds the contract with retrospective effect. Disclosing the awkward fact and dealing with it in a clause is almost always cheaper than defending a dwaling claim two years later. Our article on contracting with Dutch parties deals with the practical side of this stage.

General terms and conditions: the part everyone skips

Most Dutch commercial contracts are shorter than they look, because the bulk of the terms sits in the general terms and conditions (algemene voorwaarden). The Civil Code treats those separately from the individually negotiated core of the deal, and it imposes two requirements that decide whether they apply at all.

The first is incorporation: the terms must have been declared applicable and accepted, which happens easily and can even happen by a reference in an order confirmation that the other party does not contest. The second is the duty to provide the terms. The user of general terms must give the other party a reasonable opportunity to take note of them before or at the time of contracting, in practice by handing them over or sending them; a reference to a website is sufficient only in defined circumstances, and merely printing them on the back of an invoice that arrives after delivery is not. If that duty is not met, the other party can annul the clauses, and the contract then continues without them. That is how a carefully drafted limitation of liability disappears.

For contracts with consumers the Code goes further. It lists clauses that are always unreasonably onerous and clauses that are presumed to be, and either category can be annulled by the consumer. European consumer law adds a further layer, under which a court must test standard terms in a consumer contract of its own motion, whether or not the consumer raises the point. Small businesses do not benefit from those lists directly, but the courts have long accepted that the standards can radiate outwards to a small counterparty in a comparable position.

Two further points repay attention. Where both parties refer to their own terms, the Dutch rule is that the first set applies unless the second party expressly rejects the first, so a clause in your order confirmation that expressly rejects the other side’s terms is worth more than a longer set of terms. And the core clauses of the deal, such as the price and the description of what is being supplied, are not general terms at all and are not subject to this regime. Our guide on drafting general terms and conditions works through a full set clause by clause.

Employment contracts

An employment contract exists where one person performs work for another, for remuneration, in a relationship of subordination. The label the parties put on the document does not control the outcome; the courts look at what was agreed and how the parties actually behaved. Because the consequences of employment status are extensive, this is the area where drafting errors are most expensive.

A collective labour agreement (CAO) may apply to your sector, either because you are a member of the contracting employers’ organisation or because the CAO has been declared universally binding. Where a CAO applies, its provisions on pay scales, working time, allowances and notice override anything less favourable in the individual contract. Check whether a CAO applies before drafting, not after; the wage development in most sectors is set at that collective level rather than in individual negotiation, and the applicable scales and percentages are published with the CAO itself.

Fixed-term contracts and the chain rule

The chain rule (ketenregeling) limits the use of successive fixed-term contracts. As a rule an employer may conclude up to three consecutive fixed-term contracts over a maximum of three years; the contract that exceeds either limit becomes a contract for an indefinite period by operation of law. Contracts count as consecutive if the interval between them does not exceed the statutory interruption period, currently six months, and a CAO may vary parts of the rule for defined sectors.

Change is coming here. Under the Wet meer zekerheid flexwerkers, which has been adopted but whose entry into force is set by royal decree, the interruption period in the chain rule will become three years rather than the current six months, which effectively ends the practice of restarting the chain after a short break. Until that decree is made, the current rule applies. Note also that the four-day rule for calling in on-call workers is not new: it has applied since 2020. Our glossary entry on the chain rule for fixed-term contracts sets out how the counting works.

Probation, non-compete and working hours

A probationary period must be agreed in writing and may not exceed the statutory maximum, which depends on the duration of the contract: none at all for a contract of six months or less, one month for a contract longer than six months but shorter than two years, and two months for a contract of two years or more or for an indefinite contract. A probationary clause that exceeds the maximum is void in its entirety, not merely reduced, which means an employer who overreaches loses the clause altogether.

The non-compete clause (concurrentiebeding) must be agreed in writing with an employee of full age. The common belief that it can only be used in an indefinite contract is not accurate: it may also be included in a fixed-term contract, but only if the employer sets out in the clause itself the compelling business interests that make it necessary, and that written reasoning must hold up if it is tested. In every case a court may annul the clause in whole or in part, or award compensation, where the employee is unfairly disadvantaged in relation to the interest the employer is protecting. Draft it narrowly in scope, duration and geography; an overbroad clause is the one most likely to be struck down when it matters.

Working hours deserve the same precision. Where an employee structurally works more hours than the contract states, the factual pattern can prevail over the written figure and the contract can be adjusted to the higher average, with knock-on effects for salary, holiday allowance and pension. Record the agreed hours exactly, deal with overtime expressly, and review actual hours against contracted hours periodically rather than allowing a divergence to become the norm. The guide on employment contracts for international workers covers the additional points that arise where the employee comes from abroad.

Agreements with self-employed contractors

An agreement with a self-employed professional is normally a contract for services (overeenkomst van opdracht). The risk in drafting it is not the contract itself but the possibility that the relationship is later held to be employment, with retrospective consequences for payroll tax, social security contributions, holiday entitlement and dismissal protection. The test is the same one used for employment: work, remuneration and, decisively, whether there is a relationship of authority.

The Supreme Court has made clear that the parties’ intention is not a separate element of the test; what matters is the rights and obligations they agreed and how the relationship worked in practice. A contract that recites independence but describes daily instructions, fixed working hours at the client’s premises and a monthly fixed sum regardless of output will not survive scrutiny. Conversely, a genuine engagement is not undermined by a single awkward feature.

Two developments matter for anyone drafting these agreements now. The moratorium on enforcement by the tax authorities ended on 1 January 2025, so the tax authorities can again impose corrections where a relationship is in fact employment; corrections run from that date forward rather than reaching back into earlier years. Separately, legislation introducing a rebuttable presumption of employment below an hourly rate threshold has been adopted, with entry into force to be set by royal decree, while the part of the original proposal that would have codified the clarification of the authority test did not survive. Until that decree is made, the assessment rests on the existing case law.

What the contract should show

Draft towards the result rather than the method. Describe the deliverable, the deadline and the acceptance criteria, and leave the how to the contractor. Avoid exclusivity, and say expressly that the contractor may work for others. Provide for substitution where the nature of the work allows it. Let the contractor use their own equipment, bear their own business costs and carry their own professional liability insurance, and invoice on the basis of milestones or hours delivered rather than receiving a fixed monthly amount that behaves like a salary.

Include the commercial clauses that a business-to-business relationship needs: ownership of intellectual property, which under Dutch law does not transfer automatically and requires a deed in writing for copyright, confidentiality, liability and its limits, and the consequences of late delivery. And review the arrangement periodically against how the work is actually being done, because it is the practice, not the document, that will be examined. Our article on when a contractor becomes an employee sets out the criteria in detail.

Commercial agreements

For commercial contracts the drafting effort is best spent on four things: what is being delivered, when payment is due, who owns the result, and what happens when something goes wrong. Everything else is usually negotiable; these four are where disputes start.

Define the scope by reference to concrete deliverables, acceptance criteria and, just as importantly, exclusions. A specification that lists what is not included prevents most scope disputes before they arise, and a written change procedure prevents the rest. Where the parties agree on targets, distinguish clearly between an obligation to achieve a result and an obligation to use best efforts, because Dutch law treats those very differently when performance falls short.

On payment, tie instalments to milestones rather than to dates alone, so that neither side carries the whole risk of the other’s delay. Set a payment term and state the consequences of exceeding it. In business-to-business contracts, statutory commercial interest runs on late payment and is set by reference to a rate that is published twice a year, so the clause should refer to the statutory rate rather than repeat a figure that will date. Extrajudicial collection costs can also be recovered, on a basis fixed by regulation. Retention of title, so that goods remain yours until payment, is straightforward to agree and frequently omitted.

Intellectual property does not follow the invoice. Copyright in work created by a contractor stays with the contractor unless it is assigned in writing, so a clause transferring the rights on final payment, together with a licence to use the deliverable in the meantime, belongs in every development or design contract. Where the creator is an employee acting within the scope of their duties, the employer is generally the rightholder by operation of law, which is a further reason for clarity about the status of the person doing the work.

Limiting liability, and the limits of that

Limitation and exclusion clauses are valid in Dutch law and are used in almost every commercial contract, typically capping liability at the contract value or the fees paid over a defined period and excluding consequential loss. They are not absolute. A court will not allow reliance on such a clause where doing so would be unacceptable according to standards of reasonableness and fairness, and that threshold is regularly crossed where the loss was caused deliberately or by conduct amounting to deliberate recklessness on the part of management. A cap that is grossly disproportionate to the risk allocated, or that leaves the other party with no meaningful remedy at all, is also vulnerable.

Draft accordingly. A cap that is calibrated to the contract value, coupled with a carve-out for intent and deliberate recklessness and for breaches of confidentiality or third-party intellectual property rights, is far more likely to be enforced than a clause purporting to exclude everything. Align the cap with the cover under your liability insurance, and check that the general terms in which the clause sits were properly provided, because otherwise the clause can be annulled before its content is ever examined. Our overview of types of commercial agreement under Dutch law sets out the clauses each type calls for.

Ending a contract: three different mechanisms

Dutch law distinguishes between mechanisms that English drafting often lumps together as termination, and using the wrong one is a common and expensive mistake.

Dissolution (ontbinding) is the remedy for a failure to perform. Any shortcoming in performance entitles the other party to dissolve, unless the shortcoming is too minor to justify it. In most cases dissolution requires that the defaulting party is first in default, which normally means a written default notice giving a reasonable period to perform; no notice is needed where performance has become permanently impossible or where it is clear that performance will not follow. Dissolution operates for the future and creates obligations to undo what has been performed, and it can be combined with a claim for damages. It can be effected by a written statement; a court order is not required.

Notice of termination (opzegging) ends a continuing contract for the future without any failure to perform. Where the contract provides for it, follow the clause exactly, including the notice period and the required method of notification. Where the contract is for an indefinite period and says nothing, it is in principle terminable, but the case law requires that the circumstances be taken into account: depending on the duration of the relationship, the investments made and the dependence of the other party, a sufficiently serious ground, a reasonable notice period or compensation may be required. Ending a long-standing distribution or supply relationship on short notice is one of the most frequent sources of litigation in Dutch commercial practice.

Annulment (vernietiging) attacks the formation of the contract rather than its performance, on grounds such as mistake, fraud, duress or abuse of circumstances, and it operates retrospectively. Nullity, by contrast, applies by operation of law where the contract offends mandatory law or good morals.

Employment contracts stand outside this scheme almost entirely. A fixed-term contract of six months or more requires timely written notice of whether it will be continued. An indefinite contract can only be ended by mutual consent recorded in a settlement agreement (vaststellingsovereenkomst), by permission from the UWV for economic reasons or long-term incapacity, or by the subdistrict court on one of the statutory grounds. The statutory transition payment is due from the first day of employment, including during a probationary period, and is not covered by the UWV guarantee scheme in a bankruptcy. Notice periods are asymmetrical: the period to be observed by the employer is at least double the period applying to the employee.

Cross-border contracts: language, law and forum

A contract in English, German or any other language is fully valid in the Netherlands. The requirement is agreement, not a particular language. Two practical qualifications apply. If the contract ends up before a Dutch court, documents that are not in Dutch will generally have to be translated, which costs time and money. And where a contract exists in two language versions, state which one prevails, because otherwise a discrepancy becomes a question of interpretation at the worst possible moment.

Interpretation itself is worth a sentence. Dutch courts do not read a contract purely literally: they ask what meaning the parties could reasonably attribute to the provisions and what they could reasonably expect of each other, taking into account the circumstances. In a negotiated contract between professional parties advised by lawyers, considerable weight is given to the wording, and an entire agreement clause reinforces that, but the text is the starting point rather than the whole answer.

Choice of law and choice of forum belong in every cross-border contract. Within the European Union, the applicable law of a commercial contract follows from the Rome I Regulation, which gives effect to a choice of law and, in its absence, points to the law of the country where the party providing the characteristic performance is established, with mandatory protective rules for consumers and employees. Jurisdiction follows from the Brussels I recast Regulation, which gives effect to a jurisdiction clause and otherwise points to the defendant’s domicile or the place of performance. Arbitration is an alternative worth considering where enforcement will take place outside Europe.

One trap deserves a specific mention. In an international sale of goods between businesses established in contracting states, the United Nations Convention on Contracts for the International Sale of Goods applies automatically, alongside a choice of Dutch law, unless the parties exclude it. It changes the rules on conformity, notification and remedies. Decide whether you want it, and say so in the contract either way.

Where drafting most often goes wrong

The recurring problems are ordinary. Using a template found online, drafted for another jurisdiction, that refers to institutions Dutch law does not have. Contracting with a trade name instead of a legal entity, so that the counterparty turns out not to exist. Failing to check signing authority in the Chamber of Commerce register. Leaving key terms such as completion, material breach or reasonable efforts undefined, so that every dispute begins with an argument about vocabulary.

Then there are the omissions. No provision on how the contract may be varied, so that a chain of emails becomes the operative agreement. No retention of title. General terms that were never provided and can therefore be annulled. A liability cap in terms that are unenforceable for that reason. A confidentiality clause with no duration. A dispute clause that names a court that has no jurisdiction, or an arbitration clause referring to an institute that no longer exists.

Finally, there is the mismatch between the document and the practice. A contract that says one thing while the parties do another is worth very little; Dutch courts look at how the relationship actually worked, and consistent conduct can amend an agreement or forfeit a right. Reviewing important contracts periodically against what is actually happening is a small discipline that prevents most of these problems.

Frequently asked questions

Does a contract have to be in Dutch to be valid?

No. A contract in English or any other language is enforceable in the Netherlands, because what the law requires is agreement rather than a particular language. If proceedings follow, non-Dutch documents will usually have to be translated for the court, which adds cost and time. Where there are two language versions, include a clause stating which version prevails; for employment contracts with employees who do not read Dutch, make sure the version they signed is one they genuinely understood, because a party who could not understand the terms has a stronger argument on interpretation.

Are verbal agreements binding?

Yes, in most cases. Dutch law does not require writing for the ordinary contract, so an agreement reached by telephone or in a meeting binds both parties. The difficulty is evidence: the party asserting a term has to prove it, and without a document that is hard. A limited number of clauses and contracts must be in writing on pain of nullity, including the non-compete and probationary clauses in an employment contract and the purchase of a home by a consumer buyer, who also has a statutory reflection period after signature.

Can I use a template from the internet?

A template can be a useful starting point for a simple, low-value arrangement, but it is a poor basis for anything that matters. Most templates in circulation were written for another legal system, use concepts Dutch law does not recognise, and contain limitation clauses that would not survive the requirements described above. The specific risks are the clauses a template cannot know about: your delivery obligations, your intellectual property, your insurance cover and the way you actually work.

How do I terminate a contract correctly?

Identify first which mechanism applies. If the other party has failed to perform, you are normally in the territory of dissolution, which usually requires a written default notice with a reasonable period to perform before you dissolve. If you simply want the relationship to end, you are in the territory of notice, and you must follow the contractual notice clause; for an indefinite contract with no clause, a reasonable notice period and, depending on the circumstances, a sufficient ground may be required. Employment contracts follow their own regime and cannot be ended by a simple notice letter. Sending the wrong kind of letter is itself a breach, so the analysis comes before the letter.

What if the other party uses its own general terms?

Where both parties refer to their own terms, the first set applies unless the second party expressly rejects it. So the effective step is not a longer set of terms but a clear rejection of the other side’s terms in your own order or confirmation. Check as well whether the other party actually provided its terms before or at the time of contracting; if it did not, you can annul the clauses, which is often the quickest route out of an unfavourable limitation of liability.

Law and More drafts and reviews contracts for businesses operating in the Netherlands: employment contracts and settlement agreements, contracts with self-employed professionals, general terms and conditions, distribution, agency and service agreements, and the cross-border clauses that decide which law and which court will apply. If you are preparing an agreement, or you have received one and want to know what you are signing, please contact us and we will go through it with you.