Legal advice on contracts under Dutch law: what it should cover

Legal advice on contracts under Dutch law answers four questions: whether a contract has come about at all, whether its terms hold up against mandatory law, whether your general terms and conditions actually bind the other party, and what you must do procedurally before you can terminate or claim damages. Dutch contract law is largely found in Books 3 and 6 of the Burgerlijk Wetboek (Civil Code), and it differs from Anglo-American contract law on points that matter every day: there is no requirement of consideration, most contracts are form-free, and a clause that is valid on paper can still be set aside because relying on it would be unacceptable by standards of reasonableness and fairness.

One preliminary point clears up a common misunderstanding. Giving legal advice is not a reserved activity in the Netherlands: anyone may do it. What is regulated is representation in court, which in most civil proceedings before the district court, the court of appeal and the Supreme Court is reserved to advocaten, and the drawing up of the deeds that only a notaris may execute. Only advocaten and notarissen are bound by professional conduct rules, are required to carry professional indemnity insurance and enjoy legal professional privilege. If a template site or an unregulated consultant gets your contract wrong, you have no professional liability to fall back on. That is the practical reason to take the choice of adviser seriously, not a matter of titles.

When has a contract come about under Dutch law

A contract is formed by an offer and its acceptance, as article 6:217 of the Civil Code puts it. Behind that simple rule lies the doctrine that governs almost every formation dispute: an agreement requires an intention that corresponds with a declaration, and where they diverge, the other party may still rely on what it reasonably understood from your words or conduct. That is why a negotiator who says yes to the commercial terms and privately intends to keep haggling can find that the deal is done. Silence is not acceptance, unless a prior course of dealing or trade usage makes it so.

There is no consideration requirement. Dutch law does not ask what each side gave in return, and the old requirement of a lawful causa disappeared with the current Civil Code. What replaced it is a nullity rule: a contract whose content or purpose conflicts with mandatory statutory provisions, with public order or with good morals is void or voidable. So the correct advice question is not whether something of value was exchanged, but whether the agreement crosses a mandatory rule.

Most contracts are form-free and an oral agreement is binding, but the exceptions matter and they are absolute. The transfer of Dutch real estate and the transfer or pledge of shares in a Dutch BV require a notarial deed, real estate transfer additionally requires registration in the public registers, and prenuptial and cohabitation agreements require notarial form. Failing to observe a form requirement does not make the contract merely awkward to prove; it makes it invalid. Where no deed is required, the eIDAS Regulation and the Civil Code together mean that an electronic contract, including a qualified electronic signature, can satisfy a written-form requirement provided the method used is sufficiently reliable given the purpose of the document.

Two formation traps recur. The first is the battle of forms. Where both parties refer to their own general terms, article 6:225 of the Civil Code gives priority to the terms referred to first, unless the second party expressly rejects the first set; a rejection buried in the small print does not count as express. The second is walking away from negotiations. Dutch law does not treat negotiation as risk-free: depending on how far the talks have advanced and what expectations were created, breaking them off can oblige a party to compensate the other side costs, and in exceptional cases to continue negotiating. Our note on contract negotiation strategies deals with how to manage that exposure with a well-drafted letter of intent.

Do your general terms and conditions actually apply

This is the single most productive area of contract advice in the Netherlands, because so many businesses assume their algemene voorwaarden (general terms and conditions) are in force when they are not. Two separate questions have to be answered. The first is whether the terms form part of the contract: a reference in the offer is generally enough, and the other party is bound even if it has not read them. The second is whether the user gave the other party a reasonable opportunity to take note of them. Under article 6:233 of the Civil Code a term is voidable if that opportunity was not given, and article 6:234 sets out how it must be done, in principle by handing the terms over before or at the moment the contract is concluded, or by making them available electronically in a way that allows storage.

The consequence of getting this wrong is severe and one-sided: the other party can annul the individual clauses it dislikes, typically your limitation of liability, while the rest of the contract stands. A reference to a deposit at the Chamber of Commerce or the court registry is only permissible where handing the terms over is not reasonably possible, which in an era of email and websites is rarely the case. For contracts concluded electronically the terms must be provided in a form that the other party can save and reproduce; a link that later goes dead is a real risk.

Content control comes on top of that. In contracts with consumers, the Civil Code contains a black list of terms that are always unreasonably onerous and a grey list of terms that are presumed to be, and both are read in the light of the EU Unfair Terms Directive, which requires the court to apply them of its own motion. Our article on Dutch law on consumer protection in contracts works through those lists. Between businesses the lists do not apply directly, but a small business facing a large counterparty can invoke their reflex effect, and the general standard that a term must not be unreasonably onerous applies to every contract. Very large companies, defined by reference to their financial reporting obligations or workforce, are excluded from that protection altogether, which is a reason for a substantial business to negotiate its liability cap rather than rely on the statutory route.

Which clauses Dutch law will not enforce as written

A Dutch court has more room to adjust a contract than an English or American court, and good advice prices that in rather than ignoring it. An exoneration clause is valid in principle, but a party cannot invoke it where doing so would be unacceptable by standards of reasonableness and fairness, which is the test the Supreme Court applies and which bites hardest in cases of deliberate or grossly negligent conduct by management. A contractual penalty is enforceable, but the court may reduce it on the application of the debtor where the penalty is manifestly excessive, and it may not be combined with a claim for damages for the same breach unless the contract says so.

Restrictive covenants have their own regimes. A non-competition clause in an employment contract is valid only in writing with an employee of full age, and in a fixed-term contract only if the employer sets out in the clause itself the compelling business interests that require it, which the court will review; our article on the non-compete in a temporary contract explains how that test is applied. A court may limit or set aside such a clause and may award compensation for the period it restricts the employee. Terminating conditions attached to an employment contract are also strictly policed, as we set out separately on terminating conditions in employment contracts. In commercial contracts, clauses allowing one party to change prices or terms unilaterally, and clauses excluding termination for an indefinite-term agreement altogether, are the ones most often trimmed back by a court.

Signature, authority and who is actually bound

A contract signed by someone without authority binds nobody, and this is the cheapest check in the whole process. For a Dutch BV or NV, the power to represent the company lies with the board and, unless the articles provide otherwise, with each director individually; the articles may impose a joint signature requirement or require shareholder approval for certain transactions, and any restriction that is registered is enforceable against you. Take an extract from the Handelsregister at the Kamer van Koophandel before signing anything substantial and read the restrictions, not only the names.

Where the person who signed lacked authority, the company is still bound if you reasonably assumed that authority existed on the basis of facts attributable to the company, such as the way it has behaved in earlier transactions or the title it allowed the signatory to use. That doctrine rescues many contracts but it is a fallback, not a plan. For share transfers in a BV and for real estate the notarial deed is the moment that matters, and the notaris performs the authority check as part of the deed. Getting the parties right also means checking who your counterparty actually is: a trading name is not a legal entity, and contracting with the wrong entity in a group leaves you with a claim against an empty company. Our contract lawyers treat this as the first item on the checklist rather than the last.

What you must do before you can terminate or claim damages

Dutch law imposes a procedure, and skipping it is the most common way to lose an otherwise strong case. Where the performance is defective, article 6:89 of the Civil Code requires the creditor to complain within a reasonable time after it discovered or should have discovered the defect, on pain of losing all its rights; what is reasonable depends on the nature of the contract and the parties.

Next comes default. Unless performance has become permanently impossible, or the contract sets a strict deadline whose expiry itself puts the debtor in default, or the debtor has told you it will not perform, you must send an ingebrekestelling (notice of default) in writing that fixes a reasonable period for performance. Only after that period has passed is the debtor in verzuim, and only then do the rights to damages for delay and to rescind arise. Rescission of a contract for breach is available for any failure to perform unless the failure, given its minor significance, does not justify it, and it can be effected by a written declaration without going to court. Where the parties prefer to close the matter themselves, the result is recorded in a settlement agreement, which binds them even where it departs from their strict legal positions. Finally, watch the clock: a claim for performance or damages under a contract is in principle time-barred five years after the day following the day on which the creditor became aware of the claim and of the debtor, and the period is interrupted by a written demand or notice that unambiguously reserves your rights, under article 3:317 of the Civil Code.

Cross-border contracts: law, forum and the sales convention

In a contract with a party outside the Netherlands, three separate choices have to be made and they are frequently confused. The applicable law is determined by the Rome I Regulation, which lets the parties choose freely; absent a choice, the contract is generally governed by the law of the country where the party who is to effect the characteristic performance has its habitual residence, and a choice of law cannot deprive a consumer or an employee of the protection of the mandatory rules that would otherwise apply. The forum is determined by the Brussels I Recast Regulation within the EU, which upholds a choice of court and otherwise points to the domicile of the defendant or the place of performance, and the resulting judgment circulates in the EU without exequatur.

The third choice is the one most often missed. The Netherlands is a party to the United Nations Convention on Contracts for the International Sale of Goods, and it applies automatically to a commercial sale of goods between parties in different contracting states. A choice for Dutch law does not exclude it, because the Convention is part of Dutch law; if you want the Civil Code rules instead, the contract has to exclude the Convention expressly. Which regime is better depends on which side of the deal you are on, and that is a genuine advice question rather than boilerplate. Where the counterparty sits outside the EU, ask the enforcement question before you agree the forum: a judgment you cannot enforce where the assets are is not worth the procedure that produced it. Our checklist before you sign a contract goes through these points in order.

Warning signs your contract was never tested against Dutch law

Some tells are unmistakable. Recitals reciting good and valuable consideration, a governing law clause naming a US state, a reference to the Federal Arbitration Act, a representations and warranties structure with an indemnity but no cap, or the phrase time is of the essence used as if it replaced the notice of default: each of these shows a template drafted for another legal system. None of them is automatically fatal, but each will be interpreted by a Dutch court under Dutch rules of interpretation, which look at the meaning the parties could reasonably attribute to the provisions in the circumstances rather than at the words alone.

Other signals are commercial. Unlimited liability or an uncapped indemnity, a termination right that runs in one direction only, price indexation tied to an undefined market index, a penalty clause without a stated relationship to the damage, general terms referred to but never supplied, and an automatic renewal with a notice period longer than the term itself. If a signed contract contains several of these, the sensible step is a second opinion before the next deal rather than a dispute about the last one. Repeated addenda to clarify the same issue point in the same direction: the original drafting did not match how the parties actually work.

Choosing and briefing an adviser

Match the adviser to the risk. For a low-value, purely domestic, one-off transaction a good template plus a careful read of the points above may be enough. For anything involving intellectual property, personal data, recurring services, security over assets, a foreign counterparty or an employment relationship, the cost of correcting a clause afterwards exceeds the cost of reviewing it beforehand by an order of magnitude. Where a notarial deed is required, the notaris is not optional and is independent of both parties. Where litigation is a realistic outcome, involve the lawyer who would conduct it while the contract is still being drafted.

Funding routes exist and are underused. Legal expenses insurance covers many consumer and employment matters and often commercial ones as well; where the insurer decides that proceedings are needed, the insured has the right to choose its own lawyer, a right the Court of Justice of the European Union has interpreted broadly and which the insurer cannot contract away, although it may cap the amount it pays. Individuals whose income and assets fall below the ceilings set each year under the Wet op de rechtsbijstand can apply to the Raad voor Rechtsbijstand for a toevoeging and pay only a personal contribution, and Het Juridisch Loket gives free first-line information.

A good brief saves more money than a negotiated rate. Send the draft in an editable format, the correspondence that shows what was already conceded, the Chamber of Commerce extracts of both parties, and a short note on the commercial drivers: what the deal is worth, when it has to go live, and what you will do if it does not. Then ask the questions that produce advice rather than commentary. Which clauses expose us to uncapped or uninsured liability. Which terms are mandatory under Dutch law and therefore not worth negotiating. What would you push for if you sat on the other side. How do we enforce this if the counterparty is abroad. What do we have to do, and by when, if they fail to perform.

Finally, treat the contract as a live document. Diarise the notice and renewal dates on the day of signature, keep one master version, record variations in writing even where the contract does not require it, and review the standard terms you use whenever the law changes. Most of the disputes that reach us began with a clause nobody looked at again after the deal closed.

Frequently asked questions about legal advice on contracts

How Law and More can help

Law and More drafts, reviews and negotiates commercial, employment and consumer contracts under Dutch law, checks whether your general terms and conditions are enforceable, advises on choice of law and forum in cross-border agreements, and acts when a contract is breached. We work in Dutch and English and can involve German and French speaking lawyers where a deal requires it. If you would like an existing contract or set of standard terms tested against Dutch law, or a new agreement drafted, you can reach our team through our website.