Supply agreement in the Netherlands: clauses, risks and termination

A supply agreement is a framework contract in which a supplier undertakes to deliver goods or services to a buyer on agreed terms over a period of time. Under Dutch law it is formed by offer and acceptance (article 6:217 of the Dutch Civil Code) and needs no particular form, but the default rules of the Civil Code apply wherever the contract is silent. The main exception to that freedom lies in the mandatory rules on payment terms, general terms and conditions and, in cross-border sales, the Vienna Sales Convention.

The agreement is governed by the general law of obligations in Book 6 of the Civil Code and, where goods are sold, by the sales rules in Book 7. Its practical function is to fix the specification, the price, the delivery windows and the consequences of failure while the relationship is still healthy. Below, we explain which clauses carry the risk, what you can do when the supplier fails, and how the contract ends.

What is a supply agreement under Dutch law?

It is a contract like any other: binding once both parties intend to be bound and the essential obligations can be determined. No written form is required, so an exchange of emails can be as binding as a signed document.

Dutch contract law starts from freedom of contract. Parties may agree what they like, in whatever form they like. A supply agreement concluded by exchange of emails is as binding as one signed in a boardroom. There is no English-style consideration requirement. There is also no general statutory duty to record a commercial contract in writing. What the law does require is that the parties intended to be legally bound and that the essential obligations are determinable.

That freedom is exactly why the written document matters. If the contract is silent, the default rules of the Civil Code fill the gap. Those defaults are rarely the allocation of risk a buyer or a supplier would have chosen. A written agreement is also your evidence. In a dispute the Dutch court is free in its assessment of evidence. The party that can show a signed specification, a dated delivery schedule and a paper trail of complaints is in a much stronger position than the party relying on memory.

Why is it a framework rather than a single purchase?

Because most supply agreements are continuing contracts (duurovereenkomsten): they create a lasting relationship rather than one exchange. The individual deliveries are then called off by purchase order.

Typically the agreement itself contains no purchase obligation at all, or only a minimum volume. That two-layer structure works well, but only if the agreement states clearly that it prevails over anything printed on an order, an order confirmation or a delivery note. Without that clause, every order becomes a fresh negotiation about which terms apply.

Is a supply agreement the same as an agency or distribution contract?

No. A commercial agent enjoys mandatory statutory protection; a supplier or distributor that buys and sells in its own name does not.

The distinction has teeth. An agent who negotiates or concludes contracts in the principal’s name is protected by articles 7:428 and following of the Civil Code, including notice periods and a goodwill payment on termination. A distributor who buys and resells in its own name has no such statutory regime. Dutch case law on the termination of long-running contracts still limits how abruptly that relationship can be ended, however. Our overview of types of commercial agreements under Dutch law sets out where each contract type sits.

Which clauses decide who carries the risk?

Four clauses do most of the work: the specification, the payment terms, the delivery and risk provision, and the retention of title. When a supply relationship goes wrong, these are the provisions a court reads first.

A supply agreement is read clause by clause when it goes wrong. It therefore pays to know which provisions actually shift risk and which are decoration.

How do you make the specification enforceable?

Make it objective and testable. Whatever you write into the specification becomes the yardstick for conformity; whatever you leave out is measured against a vague standard of normal use.

Article 7:17 of the Civil Code requires delivered goods to conform to the contract. The buyer may expect the properties needed for normal use. For any particular use that was communicated, the buyer may expect the properties it could reasonably expect on the basis of the agreement. The word that carries all the weight there is agreement.

So reference a recognised standard where one exists and name the tolerances. State the acceptance test and say who performs it. Record whether an approved sample or a first article is decisive. For services, the equivalent discipline is to define the deliverable and the response times rather than to promise best efforts. An obligation to make an effort is very hard to breach, and therefore very hard to enforce.

What payment terms may businesses agree?

The statutory default is 30 days after receipt of the invoice, and a term longer than 60 days is only valid if it is not manifestly unfair to the supplier. Since 1 July 2022, a large company buying from a small or medium-sized supplier may not agree a term longer than 30 days at all.

These rules are in article 6:119a of the Civil Code. Where a large company buys from a small or medium-sized business, a longer term is void and the 30-day term applies by operation of law. Check your standard purchasing conditions against this rule before you roll them out to smaller suppliers.

Once payment is late, statutory commercial interest runs automatically, without a reminder and without a court order. The rate is not fixed in the Civil Code. It is derived from the European Central Bank refinancing rate, published by the Dutch government and adjusted twice a year. So state in the contract that the statutory commercial interest under article 6:119a applies, rather than writing a percentage that will soon be out of date. Reasonable extrajudicial collection costs can be claimed on top, calculated under the statutory decree on such costs.

How do you deal with price changes over a long contract?

Use a formula, not a promise to talk. A fixed price in a multi-year relationship is a bet on stable input costs.

An indexation formula tied to a published index is far more robust than a right to renegotiate. So is a raw material escalation clause with a defined threshold and a symmetrical downward adjustment. A right to renegotiate, in practice, only gives you a right to talk.

When does risk pass, and how does retention of title protect the supplier?

Risk passes to the buyer on delivery, even if ownership has not yet transferred. A retention of title lets the supplier keep ownership until the price is paid.

The first rule is in article 7:10 of the Civil Code. Incoterms 2020 are the usual shorthand for who arranges and pays for carriage, insurance and customs, and when risk moves. They are contractual trade terms rather than law, however. Name the rule and the named place precisely, and check that the rule you chose matches the transport you actually use.

For the supplier, the single most valuable clause is the retention of title of article 3:92 of the Civil Code. Ownership passes only when the price is paid. The supplier can therefore reclaim unpaid goods from a buyer that stops paying or becomes insolvent. Dutch law also allows an extended retention of title covering all claims from the supply relationship.

A retention of title only works under three conditions. It must be agreed before or at the moment of delivery. The goods must remain identifiable. And they must not have been processed into a new thing. Back the clause up with practical measures such as batch marking and separate storage. A contractor or repairer that holds someone else’s goods may also have a right of retention under article 3:290 of the Civil Code.

Whose general terms and conditions apply?

In principle, the terms referred to first. Under the Dutch “first shot” rule, the terms in the offer prevail unless the acceptance expressly rejects them.

Many supply relationships in the Netherlands are fought out on the general terms and conditions rather than on the contract itself. Articles 6:231 and following of the Civil Code define general terms as clauses drafted for repeated use and not individually negotiated. They attach two consequences that often surprise foreign parties.

How does the battle of forms work?

Article 6:225 paragraph 3 of the Civil Code applies the first shot rule. Where an offer and an acceptance each refer to different sets of general terms, the terms referred to in the offer prevail, unless the acceptance expressly rejects them.

Rejecting the other side’s terms in the small print of your own is not enough. The rejection has to be explicit and made at the right moment. In practice, the party that gets its terms in first, and expressly rejects any others, usually wins.

What happens if you never sent your terms?

The other party may be able to annul the clauses it dislikes. The user of general terms must give the other party a reasonable opportunity to take note of them.

Under articles 6:233 and 6:234 of the Civil Code, this is done in principle by handing the terms over or sending them before or at the time of contracting. Electronic provision is permitted where the contract is concluded electronically, or otherwise with the other party’s consent. If that duty is not met, the other party can annul a clause. A clause that is unreasonably onerous can be annulled in any event.

There is an important carve-out. Under article 6:235, a party that is itself large cannot invoke these grounds. Large means that it is obliged to publish annual accounts or employs at least fifty people. A small Dutch buyer often can invoke them.

The practical lesson is unglamorous. Attach the terms to the offer, refer to them in the order confirmation and keep proof of sending. Then check whether your standard set contains anything a Dutch court would strike out. We explain this in more detail in our guide to drafting general terms and conditions.

What can you do when the supplier is late or delivers the wrong goods?

First put the supplier in default with a written notice that sets a reasonable deadline. Only then can you claim damages or terminate, unless the contract contains a fatal deadline that makes a notice unnecessary.

Dutch law does not let a buyer jump straight to damages. In most cases the supplier must first be in default (verzuim). Article 6:82 of the Civil Code requires a written notice of default giving a reasonable period for performance. Only after that period expires without performance is the supplier in default, and only then does the claim for damages under article 6:74 arise. The notice is not a formality to skip. A buyer that complains by telephone and never puts a deadline in writing puts its claim at risk.

How do you avoid the notice of default?

Agree a fatal deadline for critical deliveries. Default then arises the moment the deadline passes.

Under article 6:83 of the Civil Code, default arises without notice where a deadline set in the contract passes without performance and that deadline was meant to be final. Agreeing an express fatal deadline (fatale termijn) turns every missed critical date into an immediate default. A penalty clause under articles 6:91 and following can have a similar effect and spares you the burden of proving loss. A court retains the power under article 6:94 to reduce a penalty that is manifestly excessive, and that power cannot be excluded.

Which remedies does the buyer have?

Once the supplier is in default, the buyer may suspend payment, claim damages, demand performance or terminate. Termination is not available for a breach of minor significance.

Suspension is based on article 6:262 of the Civil Code and termination on article 6:265. Termination is available for any failure in performance, except where the failure, given its minor significance, does not justify it. That is why serious remedies deserve a written cure period and a defined threshold, such as a stated number of late deliveries in a rolling period.

When can the supplier escape liability?

Through force majeure or, exceptionally, unforeseen circumstances. The contract can widen or narrow the first; the second has a high threshold.

Force majeure under article 6:75 of the Civil Code excuses a failure that cannot be attributed to the supplier. It is a default rule that the contract can change. A force majeure clause that lists supplier failure, strikes at subcontractors or shortage of raw materials as excusing events therefore shifts the risk considerably. Under article 6:258, a court may amend or set aside a contract on the ground of unforeseen circumstances. The threshold is high, and the provision is not a general escape from a bad bargain.

How quickly must you complain about a defective delivery?

Within a reasonable time (bekwame tijd) after you discovered the defect, or reasonably should have discovered it. Miss that window and you lose the right to rely on the defect, however serious it is.

Article 7:23 paragraph 1 of the Civil Code imposes that duty on a buyer of goods. Article 6:89 imposes the equivalent duty in every other contractual relationship, including the supply of services.

What counts as a reasonable time depends on the facts. The nature of the goods, whether the defect was visible on delivery, the effort an inspection would take and the harm the delay caused the supplier all play a role. The fixed two-month period that people often quote applies only to a consumer buying a movable thing, not to commercial supply. A professional buyer cannot assume it has two months to think about it. Perishable or time-critical goods can require a complaint within days.

How does an inspection clause help?

It replaces an argument about reasonableness with a clear procedure. Both parties know when the goods count as accepted.

Agree an inspection window. State that the goods are deemed accepted if no written complaint is made within it. Set out what happens on rejection: repair, replacement or credit, within a stated period, at the supplier’s cost and risk. That gives the supplier certainty and gives the buyer a clean procedural route.

Is there a second deadline after the complaint?

Yes. Under article 7:23 paragraph 2 of the Civil Code, the buyer’s claim becomes time-barred two years after the complaint was made, unless the limitation period is interrupted.

Interruption is done by a written demand or notice under article 3:317 of the Civil Code. A short registered letter reserving your rights costs little compared with a claim that expires unnoticed while the parties are still negotiating.

How do you end a supply agreement without ending up in court?

A fixed-term contract simply expires; a contract for an indefinite period can be terminated by notice. For long-running relationships, however, reasonableness and fairness may require a longer notice period, a serious ground or compensation.

How a supply agreement ends depends on how its term was drafted. An automatic renewal clause can quietly extend a fixed term for another full period if nobody serves notice. Diarise the notice date rather than the end date. For a contract for an indefinite period, Dutch law is stricter than the contract text often suggests.

What notice do you need for an indefinite contract?

If the contract has no notice provision, it is in principle terminable. The requirements of reasonableness and fairness in article 6:248 of the Civil Code may still demand a sufficiently serious ground, a longer notice period or compensation.

That follows from Supreme Court case law on continuing contracts. The factors that count include the length of the relationship, the investments the other party made at your request, its degree of economic dependence and the time it needs to find an alternative. A supplier that reorganised its production line for one buyer cannot simply be dismissed with a month’s notice.

Even with a notice clause, terminating in bad faith or at a moment calculated to cause maximum damage can be curtailed under the same article. The safer route is to write the exit into the contract. Include a defined notice period and an express right to terminate for cause after a written cure period. Add wind-down obligations covering final call-offs, spare parts availability, return of tooling, data and stock, and confidentiality after the end. Those clauses look dull at signature and are the only ones anyone reads at the end.

What happens if the supplier goes bankrupt?

The buyer can force the trustee to choose whether the contract will be performed. A properly agreed retention of title remains effective against the trustee.

Under article 37 of the Bankruptcy Act, the buyer may demand that the trustee declare within a reasonable period whether the contract will be performed. If the trustee does not respond, it loses the right to demand performance. For the supplier, this is another reason to get the retention of title right at the start rather than after the first missed payment. Our note on contracting with Dutch parties covers the mistakes that most often surface at this stage.

Which law and which court apply to cross-border supply?

That depends on the choice of law and forum in the contract; without one, the EU rules point to the seller’s or service provider’s country and to the defendant’s court or place of delivery. On top of that, the Vienna Sales Convention (CISG) applies automatically to many international sales of goods.

Many supply agreements concluded in the Netherlands cross at least one border. Three questions then come before any clause about the goods. Which law governs the contract? Does the Vienna Sales Convention apply on top of or instead of that law? And which court or tribunal decides?

Which law governs the contract?

The law the parties chose. Without a choice, the law of the seller’s or service provider’s country usually applies.

Applicable law is determined by the Rome I Regulation (Regulation (EC) No 593/2008). A contract for the sale of goods without a choice of law is governed by the law of the country where the seller has its habitual residence. A contract for services is governed by the law of the country where the service provider does. A Dutch buyer that never addressed the question may therefore be contracting under foreign law.

Why does the Vienna Sales Convention matter?

Because choosing Dutch law does not exclude it. The CISG applies automatically to international commercial sales of goods between parties in different contracting states, and the Netherlands is a contracting state.

Choosing Dutch law therefore brings in the CISG, not the Civil Code sales rules, unless the contract excludes it expressly. The CISG has its own regime. It requires a fundamental breach before a contract can be avoided. It has its own notice requirements for non-conformity, with a long-stop period of two years from handover. And it does not deal with retention of title or with the validity of penalty and exoneration clauses, which remain governed by national law. Exclude it or accept it deliberately, but do not leave it to chance.

Which court decides a dispute?

Within the EU, the court the parties chose in writing. Without a choice, the defendant’s home court or the court of the place of delivery.

Jurisdiction within the European Union follows the Brussels I bis Regulation (Regulation (EU) No 1215/2012). A written choice of court clause is in principle binding under article 25. Without one, the defendant can be sued in its own member state or, for contractual claims, at the place where the goods were delivered or the services provided. Arbitration is the alternative. For proceedings seated in the Netherlands, it is governed by articles 1020 and following of the Code of Civil Procedure. The Netherlands Arbitration Institute is the usual institutional choice. An arbitral award benefits from the New York Convention when enforcement abroad is likely. In purely domestic matters, the subdistrict court (kantonrechter) handles smaller claims and the district court the rest.

Which additional risk clauses are worth negotiating?

Beyond the core terms, a handful of provisions repay the negotiating time they cost. Which of them you need depends on what you buy and where it comes from.

• Second source and diversification. A clause allowing the buyer to source elsewhere without penalty turns a supply failure into a commercial inconvenience rather than a production stop. It should apply when the supplier cannot deliver, is sanctioned, or misses agreed performance thresholds.
• Sanctions and export control. European Union sanctions regulations apply directly in the Netherlands and override contractual obligations. The dual-use Regulation (EU) 2021/821 adds licensing duties for listed items. A clause on who obtains licences, and what happens if a licence is refused, avoids a stalemate in which neither party can lawfully perform.
• Liability caps. Caps and exclusions are valid in principle in commercial contracts. A court can set one aside under article 6:248 paragraph 2 of the Civil Code, in particular where the loss was caused by intent or deliberate recklessness of the supplier or its senior management. Write a cap you can defend: proportionate to the contract value, with carve-outs for confidentiality and third-party intellectual property claims.
• Data and confidentiality. If the supplier processes personal data on your behalf, article 28 of the General Data Protection Regulation requires a processor agreement in writing. A supply contract that ignores it is incomplete as a matter of law.
• Supply chain due diligence. Larger companies should prepare for the Corporate Sustainability Due Diligence Directive as amended by the Omnibus I package in 2026. Member states must transpose it by 26 July 2028, and it applies from 26 July 2029. The amended version removed the harmonised EU civil liability regime and caps the maximum penalties at 3% of net worldwide turnover. The due diligence duties will still be passed down the chain through contract clauses, so agree now who bears the cost of the information requests that are coming.

What should you check before you sign?

Check who you are contracting with and whether the document answers the risk questions above. Both steps are quick and cheap in the Netherlands, and skipping them is an expensive shortcut.

An extract from the Commercial Register at the Chamber of Commerce (KVK) shows who may represent the company and with what restrictions. That matters, because a contract signed by someone without authority binds nobody until it is ratified. Filed annual accounts give a first view of solvency. They also tell you whether the counterparty is large enough to fall outside the protection of article 6:235 of the Civil Code.

Then work through the document itself:

• Does the specification describe something you could test in a laboratory, or only something you could argue about?
• Do the payment terms comply with the statutory maxima?
• Is the retention of title agreed before delivery and workable in your warehouse?
• Is there a written notice regime, a defined cure period and a fatal deadline for critical dates?
• Is the CISG expressly excluded or expressly accepted?
• Does the exit clause cover spare parts, tooling and data as well as the last invoice?

Negotiation is easier once those questions have answers. You are then no longer trading positions but allocating identified risks. A buyer that offers a longer commitment or a larger volume in exchange for a firmer delivery guarantee is negotiating. A buyer that simply asks for a lower price is haggling. The first produces a contract that survives its first crisis. Further background on the Dutch civil law framework is collected in our civil law guides.

In summary

• A supply agreement under Dutch law needs no written form, but a written contract decides which default rules of the Civil Code are replaced and serves as your evidence.
• Payment terms are regulated: 30 days by default, and a large company buying from a small or medium-sized supplier may not agree more than 30 days.
• Put a late supplier in default in writing, or agree fatal deadlines for critical deliveries.
• Complain about defects within a reasonable time and interrupt the two-year limitation period in writing.
• In cross-border sales, decide deliberately on applicable law, the CISG and the competent court.

Frequently asked questions

The short answers below apply to commercial supply contracts governed by Dutch law.

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