General purchase conditions: when do they bind your supplier?

Your general purchase conditions bind a supplier under Dutch law only if you declared them applicable in time, the supplier accepted them, and you gave the supplier a reasonable chance to read them, normally by handing them over. The main exception works against you: if the supplier referred to its own sales conditions first, or expressly rejected yours, you may end up contracting on the supplier’s terms instead.

If you fail to hand the conditions over, the supplier can annul individual clauses under Article 6:233(b) of the Dutch Civil Code (Burgerlijk Wetboek, BW). Below we explain when your purchase conditions apply, what happens when both sides use their own set, which clauses can be attacked, and what a workable set should contain.

What are general purchase conditions?

General purchase conditions are the standard terms a business uses every time it buys goods or services from another business. Article 6:231 BW defines general terms and conditions as clauses drafted for use in a number of contracts, excluding the clauses on the core of the performance (kernbedingen).

The contract records what you agreed this time: what is supplied, at what price and by when. The conditions record what is the same every time: liability, warranties, payment, intellectual property, confidentiality and applicable law. Standard sales conditions are written by and for the seller, so a business that buys without its own set negotiates from a document drafted against its interests. For the seller’s side and the consumer rules, see our article on general terms and conditions and what you should know about them.

How do you make your purchase conditions applicable?

You need three things: a clear declaration of applicability, acceptance by the supplier, and proper provision of the conditions. Miss the third and the supplier can annul clauses later under Article 6:233(b) BW.

Step 1: declare them applicable

State in the request for quotation, the purchase order or the contract that your general purchase conditions apply. One unambiguous sentence is enough. If you use more than one set, for example one for goods and one for contracted work, say which set you are invoking.

Step 2: make sure the supplier accepts them

Written acceptance is ideal but not required; acceptance can also be tacit. A supplier who receives your order stating that your purchase conditions apply, does not object and then delivers has accepted them. The problem arises when the supplier does object: the battle of forms under Article 6:225 BW, discussed below.

Step 3: give the supplier a reasonable chance to read them

Article 6:234 BW sets out how you give that opportunity. The main route is simple: hand the conditions over before or when the contract is concluded. Only if that is not reasonably possible may you instead state, before the contract is concluded, that the conditions can be inspected at your offices or have been filed with a chamber of commerce or court registry you name, and that they will be sent on request.

Courts read “not reasonably possible” narrowly. When you can simply attach a PDF to the order, that alternative will rarely be open to you. If you do use it and then fail to send the conditions promptly on request, the clauses are annullable as well.

What about electronic provision?

Under Article 6:234(2) BW you must make the conditions available electronically before or when the contract is concluded, in a way that lets the supplier store and consult them later. If the contract itself is not concluded electronically, paragraph 3 requires the supplier’s express consent to receiving them this way. A link in an email footer to a web page that can change at any time does not meet the storage requirement.

What happens when the supplier sends its own conditions back?

In a purely Dutch contract, the set referred to first normally wins. The supplier’s later reference only has effect if it expressly rejects your conditions.

This is the battle of forms. Article 6:225(3) BW resolves it with a first-shot rule: where an offer and an acceptance refer to different sets of general conditions, the second reference has no effect unless it expressly rejects the first. In practice, timing beats drafting.

How do you win the battle of forms?

Declare your purchase conditions applicable and supply them as early as possible, ideally in the request for quotation. If the supplier then quotes on its own conditions and expressly rejects yours, and you accept that quotation without more, you contract on the supplier’s terms. Refer to your own conditions again, expressly reject the supplier’s set, and make clear you only contract on your own basis. Where the relationship matters, state the applicability of your conditions in the signed contract itself.

Does the same rule apply to international purchases?

No. Where the United Nations Convention on Contracts for the International Sale of Goods (the Vienna Sales Convention, or CISG) applies, Article 6:225 BW does not. The Convention applies automatically to sales of goods between businesses in different contracting states, unless the parties exclude it.

Under the Convention, a reply with material additions or changes counts as a counter-offer. How courts then deal with two conflicting sets is not settled; under the knock-out approach the conflicting clauses cancel each other out and the Convention fills the gap. If you want your own conditions to govern an international purchase, say so and exclude the Convention expressly. Our article on the most common mistakes in international commercial contracts deals with this in more detail.

Which clauses can a supplier attack, and on what grounds?

General conditions are checked in three ways: the onerousness test of Article 6:233(a) BW, mandatory law under Article 3:40 BW, and reasonableness and fairness under Article 6:248(2) BW. Which of these a supplier can use depends on its size.

Is the clause unreasonably onerous?

Under Article 6:233(a) BW a clause can be annulled if it is unreasonably onerous for the counterparty. The court looks at the nature and content of the contract, how the conditions came about, the interests of both parties as apparent to each other, and the other circumstances. The blacklist and greylist in Articles 6:236 and 6:237 BW apply directly only where the counterparty is a consumer.

Can this supplier rely on that protection at all?

Not always. Article 6:235 BW excludes the largest counterparties: a party that publishes its annual accounts under Book 2 BW, or that employs fifty or more people, cannot invoke Articles 6:233 and 6:234 BW. A small counterparty, such as a sole trader or a local craftsman, may benefit from a reflex effect (reflexwerking), where courts use the consumer lists as guidance even though they do not apply directly.

Which limits apply to everyone?

A clause contrary to mandatory law, public order or good morals is void under Article 3:40 BW. Under Article 6:248(2) BW a clause also does not apply to the extent that applying it would be unacceptable by the standards of reasonableness and fairness (redelijkheid en billijkheid). Courts use that test with restraint, but a liability exclusion that would cover intent or deliberate recklessness is the classic clause that will not survive.

What should your purchase conditions contain?

A workable set covers definitions, liability and warranties, intellectual property, confidentiality, applicable law and forum, and payment. For contracted work, add the clauses on chain liability, the duty to warn and safety discussed further below.

Definitions, liability and warranties

A definitions clause fixes recurring terms; the difference between delivery, acceptance and approval decides when risk passes to you and when payment falls due. As purchaser you want the supplier’s liability for defects and consequential loss as wide as the market allows. Do not draft an exclusion that covers intent or deliberate recklessness: under Article 6:248(2) BW that part falls away. In the warranty clause, state what the supplier guarantees, for how long, and what remedy you have.

Intellectual property

Include a separate clause whenever you commission work, because the maker holds the copyright. Under Article 2(3) of the Dutch Copyright Act (Auteurswet), a transfer must be agreed in writing and requires a deed drawn up for that purpose. Your conditions should therefore provide for a written transfer or, at a minimum, an unrestricted licence that includes the right to modify the work and a waiver of the moral rights that can be waived.

Confidentiality, applicable law and competent court

State how long the confidentiality duty lasts and what happens to the material when the contract ends. Always specify the applicable law and the competent court, even in a purely Dutch supply chain: suppliers are taken over or turn out to be a branch of a foreign company. If you want the ordinary courts, name the district court, for example the District Court of Oost-Brabant; if you prefer arbitration, say so.

What payment term may you impose on suppliers?

If nothing is agreed, statutory commercial interest (wettelijke handelsrente) runs from thirty days after you received the invoice. A large company buying from a smaller supplier may not agree a term longer than thirty days at all.

Article 6:119a(2) BW sets that thirty-day default; no notice of default is required. Under paragraph 5, parties may agree a term of up to sixty days. A longer term is only valid if it is expressly agreed and not grossly unfair to the supplier, considering any objective reasons, the nature of the performance and good commercial practice.

The thirty-day limit for large companies

Under Article 6:119a(6) BW, where the buyer does not qualify as small under the size criteria of Article 2:397 BW and the supplier is a smaller business or a sole trader, the parties cannot agree a payment term of more than thirty days. A clause that does so is void. A large buyer therefore cannot use its conditions to impose a sixty or ninety-day term on smaller suppliers.

Collection costs and set-off

Under Article 6:96(4) BW a supplier in a commercial transaction is entitled to at least €40 in collection costs on top of interest, and a clause that takes that away will not hold. A set-off clause is worth having: you want the right to set off your claims against the invoice and to exclude the supplier from doing the same. For disputed invoices up to €25,000, the route through the subdistrict court (kantonrechter) is often faster than the conditions suggest.

What should you add when you buy works or services?

When you engage a contractor to carry out work rather than supply goods, add clauses on chain liability, the contractor’s duty to warn, safety, and any standard set such as the UAV 2012.

How do you limit chain liability for payroll taxes?

A principal or main contractor who engages a subcontractor for material work falls under the chain liability regime (ketenaansprakelijkheid) of Article 35 of the Collection of State Taxes Act 1990 (Invorderingswet 1990). If the subcontractor does not pay the payroll taxes and contributions on the wages of the people who did the work, the Dutch Tax Administration (Belastingdienst) can hold you liable. If you hire in personnel rather than contract out work, the parallel regime of Article 34 applies.

Your conditions can reduce the exposure. Oblige the subcontractor to keep proper wage records, identify the people deployed, provide payment records on request, obtain your consent before subcontracting further, and accept payment of the wage component into a blocked account (G-rekening). How the blocked account works in your case is a question for your tax adviser; your conditions create the obligations that make it possible.

Should you spell out the contractor’s duty to warn?

Yes. Under Article 7:754 BW a contractor must already warn you about errors in the assignment and defects in materials or plans you supplied, as far as it knew or should reasonably have known of them. Restating it turns an implied standard into an express obligation with an agreed moment: typically a site inspection before work starts, followed by a written report.

What about safety and standard sets such as the UAV 2012?

You can require the contractor and its staff to hold certificates such as VCA, follow your site rules, report incidents within a set time and carry insurance of a specified type and amount. Construction work is often done under the Uniform Administrative Conditions 2012 (UAV 2012), integrated contracts under the UAV-GC. Declare such a set applicable expressly and list every point on which you deviate; a general clause that your conditions prevail in case of conflict is no substitute.

What should you check as a buyer?

Most disputes about purchase conditions turn on how they were used, not on what they say. Check these points in the set you use today:

• Your conditions are attached to every request for quotation and order, not only referred to or posted on your website (Article 6:234 BW).
• The version in your order template is the current version, and your buyers know what to do when a supplier rejects it.
• Your payment clause allows no more than sixty days, and no more than thirty days towards smaller suppliers if you are a large company (Article 6:119a BW).
• For international purchases of goods, you have decided whether to exclude the Vienna Sales Convention.
• Your intellectual property clause provides for a written transfer by deed or a broad licence.
• You use a separate set, or separate clauses, for contracted work, covering chain liability, safety and the duty to warn.

What should you check as a supplier?

If a buyer’s conditions are put to you, you have more room than you may think. Check these points before you deliver:

• Whether the buyer actually handed over its conditions before or when the contract was concluded; if not, and you are not excluded by Article 6:235 BW, you can annul clauses.
• Who referred to general conditions first, and whether you expressly rejected the buyer’s set in your quotation (Article 6:225(3) BW).
• Whether the payment term exceeds sixty days, or thirty days if the buyer is a large company and you are a smaller business.
• Whether the liability and warranty clauses are so broad that they would be unacceptable under Article 6:248(2) BW.
• Whether the intellectual property clause transfers rights in your work without a deed.

What can we do for you with general purchase conditions?

Our corporate lawyers work for both buyers and suppliers on standard terms and the disputes about them. We can:

• Review your current purchase conditions against Articles 6:119a and 6:233-6:235 BW and mark every clause that is void or annullable.
• Draft a new set, or separate sets for goods and for contracted work, including chain-liability and UAV 2012 clauses.
• Check your order and quotation templates and your process for handing over the conditions.
• Assess, in a battle of forms, which set of conditions governs your contract.
• Draft the letter annulling or invoking a clause, or the claim before the subdistrict court or district court.

Summary

• Your purchase conditions bind a supplier only if you declared them applicable in time, the supplier accepted them, and you handed them over before or when the contract was concluded (Articles 6:233 and 6:234 BW).
• In a Dutch contract, the set referred to first usually wins unless the other side expressly rejects it (Article 6:225(3) BW); under the Vienna Sales Convention different rules apply.
• Large counterparties cannot use the annulment route, but every clause remains subject to mandatory law and to reasonableness and fairness.
• A large company may not agree a payment term longer than thirty days with a smaller supplier; such a clause is void (Article 6:119a(6) BW).
• For contracted work, add clauses on chain liability, the duty to warn, safety and any standard set such as the UAV 2012.

Frequently asked questions