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.

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.

A written document still matters. Where the contract is silent, the default rules of Books 6 and 7 fill the gap, and under Article 152 of the Code of Civil Procedure the 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.

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 has no such regime, although Dutch case law on long-running contracts still limits abrupt termination. 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.

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.

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 2017, 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 under Article 6:119a runs automatically, without a reminder. The rate is the ECB refinancing rate plus eight percentage points and is adjusted twice a year, so refer to the statutory rate rather than a fixed percentage. Extrajudicial collection costs can be claimed on top, under the Decree on extrajudicial collection costs (Besluit vergoeding voor buitengerechtelijke incassokosten).

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.

Articles 6:231 and following of the Civil Code define general terms as clauses drafted for repeated use and not individually negotiated.

How does the battle of forms work?

Article 6:225 paragraph 3 of the Civil Code contains this rule. 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.

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, and the contract can widen or narrow it; a clause listing supplier failure or raw-material shortages as excusing events shifts the risk considerably. Under Article 6:258 a court may amend or set aside a contract for unforeseen circumstances, but the threshold is high.

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.

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.

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.

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?

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.

Within the EU, the Brussels I bis Regulation (Regulation (EU) No 1215/2012) applies: a written choice of court is in principle binding under Article 25, and without one the defendant can be sued at home or, for contractual claims, at the place of delivery. Arbitration seated in the Netherlands is governed by Articles 1020 and following of the Code of Civil Procedure, and awards are enforceable abroad under the New York Convention.

Which additional risk clauses are worth negotiating?

Which of these you need depends on what you buy and where it comes from.

• 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. The Corporate Sustainability Due Diligence Directive, as amended by the Omnibus I package, must be transposed by 26 July 2028 and applies to the largest companies from 26 July 2029. Its duties will be passed down the chain by contract, so agree now who bears the cost of information requests.

What should you check as the buyer?

As the buyer, your risk is a supplier that fails without a remedy you can use. Check these points before you sign:

• The specification describes something you can test, with tolerances and an acceptance test.
• Critical delivery dates are fatal deadlines under Article 6:83 of the Civil Code, so no notice of default is needed.
• The inspection window and complaint procedure are workable for your goods, given the duty to complain in time under Article 7:23.
• The CISG is expressly excluded or expressly accepted.
• The force majeure clause does not excuse ordinary supplier failures such as raw-material shortages.
• The person signing for the supplier is authorised according to the Commercial Register at the KVK.

What should you check as the supplier?

As the supplier, your risk is late payment and an abrupt end to a relationship you invested in. Check these points before you sign:

• The payment term complies with Article 6:119a, including the 30-day maximum if your buyer is a large company and you are an SME.
• The retention of title under Article 3:92 is agreed before the first delivery and works in the buyer’s warehouse.
• Your general terms were sent with the offer, and the offer expressly rejects the buyer’s terms under Article 6:225.
• Your liability cap is proportionate to the contract value.
• The exit clause sets a notice period and covers final call-offs, tooling, spare parts and stock.

What can we do for you with a supply agreement?

Our corporate lawyers draft, review and negotiate supply agreements under Dutch law, in Dutch and English. Specifically:

• We draft or review your supply agreement and list the clauses that shift risk to you.
• We check your general terms against Articles 6:231 to 6:237 of the Civil Code.
• We draft the notice of default (ingebrekestelling) or the termination letter when the other party fails to perform.
• We advise on applicable law, the CISG and the choice of court or arbitration in cross-border supply.
• We assess the notice period and any compensation when a long-running supply relationship ends.

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