Mitigating a Contractual Penalty under Dutch Law
Dutch Courts can reduce contractual penalties when enforcement leads to an excessive and unacceptable outcome according to Article 6:94(1) Dutch Civil Code. Mitigation occurs when equity clearly requires it, with judges examining the relationship between actual damages and penalty amount, contract nature, and case circumstances. A penalty clause under Dutch law obligates you to pay […]
Standing Surety for Another Person’s Debt under Dutch law
Standing surety for another’s debt means you become a guarantor and legally liable for a third party’s financial obligations. As creditor, you can directly pursue the guarantor when the original debtor fails to meet payment obligations under Article 7:850 of the Dutch Civil Code. Surety agreements constitute an essential legal safeguard within Dutch contract law. […]
Supplier and Director Jointly Liable Under Dutch Law
Supplier and Director Face Joint Liability Following Distribution Agreement Termination in the Netherlands Total Energy Service B.V. (TES) entered into a distribution agreement under Dutch law with Sanisign B.V. on 24 September 2020 for the exclusive sale of alcohol-free hand sanitizer in the Netherlands. The agreement explicitly stipulated that TES could only sell the hand […]
Liability for Debts in a General Partnership under Dutch Law
In a general partnership (vennootschap onder firma or VOF), all partners are jointly and severally liable for business debts, regardless of who incurred the obligation. This liability extends to the complete private assets of each partner, as established in Article 18 of the Dutch Commercial Code. Creditors of a VOF can seek recovery from both […]
Power of Attorney for Concluding Dutch Contracts
A power of attorney is the authority granted by one person or organization to another to perform legal acts on their behalf, such as concluding contracts. This representation authority arises under Article 3:60(1) Dutch Civil Code when the principal explicitly or implicitly grants permission to the attorney-in-fact. Legal entities such as companies can participate in […]
Agreement Contrary to Dutch Law
An agreement contrary to law is void and has never legally existed. Under Article 3:40 Dutch Civil Code (BW), conflict with a mandatory legal provision leads to nullity, unless the provision exclusively protects one party – then the agreement is voidable. Payments and performances must be completely reversed. Freedom of contract forms a fundamental principle […]
Liability in a Partnership under Dutch Law
In a partnership, all partners share joint liability for debts arising from collective decisions or contractual agreements. Each partner bears personal responsibility for an equal share of these obligations, with creditors able to recover from both business assets and private property of individual partners. A partnership (maatschap) is a collaborative structure without legal personality in […]
Terminating a Construction Contract under Dutch law
As a client, you can always terminate a construction contract through dissolution or cancellation. Dissolution requires attributable breach and default by the contractor, whereby you pay only for completed work. Cancellation can occur at any time but obligates payment of the full contract sum minus savings – a difference that proves financially decisive. The construction […]
Prohibited Price-Fixing under Dutch Law
Price-fixing agreements between competing companies are strictly prohibited under Article 6 of the Dutch Competition Act. Such cartel arrangements restrict free market mechanisms, lead to artificially inflated prices for customers, and damage fair competition. The Netherlands Authority for Consumers and Markets (ACM) actively enforces these rules and imposes fines of up to millions of euros. […]
Goodwill and Termination of Dutch Agency Agreements
Upon termination of an agency agreement, the agent is entitled to goodwill compensation when they have brought in new customers or substantially expanded existing client relationships, and these customers continue to provide significant benefits to the principal after the agreement ends. The maximum compensation equals one year’s salary, calculated based on the average of the […]