Dissolution (ontbinding) ends a contract because of a failure to perform. Under article 6:265 of the Dutch Civil Code (BW), any shortcoming in a reciprocal contract gives the other party this power. Dissolution has no retroactive effect (article 6:269 BW), but creates obligations to undo what was received (article 6:271 BW).
This page covers how dissolution works in practice; for the basics see rescission of a contract.
Table of contents
How do you dissolve a contract?
Either by a written statement to the other party (article 6:267 BW) or by a court ruling. The written route is faster. The statement must be clear and should describe the breach concretely. The other party must normally be in default first, unless performance is permanently impossible.
When is dissolution not allowed?
When the shortcoming, given its special nature or minor importance, does not justify dissolution and its consequences (article 6:265(1) BW). Partial dissolution is possible (article 6:270 BW). A party that dissolves without a valid ground can itself be in breach.
What happens after dissolution?
- Future obligations lapse.
- Performances already made must be undone: goods returned, payments repaid (article 6:271 BW).
- If return is impossible, the value must be paid (article 6:272 BW).
- If the breach is attributable, the other party can claim damages for loss caused by the dissolution (article 6:277 BW).
Frequently asked questions
Is dissolution the same as termination by notice?
No. Termination by notice (opzegging) uses a contractual or statutory right and needs no breach.
Does a company in liquidation have to do with this?
No. The dissolution of a legal entity is a different concept; see dissolution and liquidation.
Related terms
- Rescission of a contract
- Shortcoming in performance (tekortkoming)
- Default (verzuim)
- Claim for performance (nakoming)
Our civil law team can draft a dissolution notice and handle the unwinding of the contract. Want to know what this means for your situation? Book a free introductory meeting.
