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A money loan agreement (overeenkomst van geldlening) is a credit agreement in which the lender undertakes to provide a sum of money and the borrower undertakes to repay a corresponding sum (Article 7:129(1) Dutch Civil Code). Dutch law adds a few default rules, in Articles 7:129-7:129f, on when the loan binds the lender, whether interest is due and when the money must be repaid.
It is advisable to draw up a clear agreement regarding the lending and repayment of the loan, the security (for example a right of pledge or mortgage, Article 3:227(1) DCC, or a guarantee) and the interest rate. Where the parties have not agreed on these points, the statutory default rules set out below apply. If a business lends to a consumer, the consumer credit rules of Title 2A of Book 7 may also apply; if so, they prevail in case of conflict (Article 7:129a DCC); those rules are not discussed on this page. Our team also advises on Dutch Distribution Law.
When is a loan agreement in the Netherlands legally binding?
In principle, a loan agreement requires no particular form: declarations can be made in any form, unless the law provides otherwise (Article 3:37(1) DCC). A loan between businesses is therefore binding even without a written contract. There are exceptions. If the lender is a natural person not acting in the course of a profession or business, the agreement does not bind the lender until the money has actually been provided to the borrower or the lender has committed in writing to provide it (Article 7:129b DCC). Until then, the borrower cannot force such a lender to pay out the loan. Interest between private individuals also requires writing (see below), and consumer credit has its own formal requirements.
How do you prove a loan: is an acknowledgement of debt enough?
Even where the law does not require writing, a written loan agreement or a signed acknowledgement of debt (schuldbekentenis) is strongly advisable, because the lender must be able to prove the loan. A signed document intended as evidence is a deed (akte, Article 156 Dutch Code of Civil Procedure). Between the parties, a deed provides compelling evidence of the truth of a party’s statement that it is meant to prove, unless this could lead to a legal consequence that is not at the parties’ free disposal (Article 157(2) DCCP). For a one-sided private deed in which only the borrower undertakes to pay money, this applies only if the borrower wrote the deed entirely by hand or added an approval stating the sum in full in letters; that extra requirement does not apply to bonds or to debts incurred by the borrower in the course of a profession or business (Article 158 DCCP). Compelling evidence means the court must accept the content as true, but the other party may still prove the contrary (Article 151(2) DCCP).
Do you have to pay interest on a loan in the Netherlands?
Whether interest is due depends first on the agreement. If both parties are natural persons and neither acts in the course of a profession or business, interest is only due if it has been agreed in writing (Article 7:129c(1) DCC). In all other cases, the borrower must pay interest on the loan, unless it follows from the agreement that no interest is due (Article 7:129c(2)). A business that lends money interest-free should therefore record that clearly.
Which interest rate applies if none was agreed?
If interest is due but the parties have not agreed on the rate, the interest is calculated at the rate set for statutory interest (Article 7:129d DCC). The ordinary statutory interest rate is set by government decree and can change during the term of the loan (Article 6:120(1) DCC). Between businesses, it is conceivable that the higher statutory commercial interest rate is applied instead; that rate equals the European Central Bank’s main refinancing rate plus eight percentage points and is reset every six months (Article 6:120(2)). If the borrower repays late, statutory interest is also due as compensation for the delay (Article 6:119 for the period of default, or Article 6:119a for a commercial agreement); a higher agreed interest rate continues to run instead (Article 6:119(3)). A clear written interest clause avoids this uncertainty.
When must a loan be repaid under Dutch law?
The time of repayment follows first from the agreement. If the agreement does not say when the money must be repaid, the borrower must repay within six weeks after the lender has given notice that it demands repayment (Article 7:129e DCC). If the parties agreed that the borrower will repay “when he is able to”, the court can determine the time of repayment on the basis of the circumstances (Article 7:129f DCC).
How do you resolve a loan agreement dispute?
If a borrower does not repay, first send a written demand stating the amount and a deadline. If that does not help, the lender can start court proceedings. Claims of up to €25,000, including interest accrued until the summons, go to the subdistrict court (kantonrechter), unless the legal basis of the claim exceeds that amount and is disputed (Article 93(a) DCCP). Before the subdistrict court, parties may litigate without a lawyer (Article 79(1) DCCP); in other cases a lawyer is required (Article 79(2)), although a defendant in summary proceedings may appear in person (Article 255(1) DCCP).
Our Dutch lawyers can advise you on this. If you fear that the borrower will move or spend its assets, a lawyer can ask the court for leave (Article 700(1) DCCP) to levy a prejudgment attachment in the Netherlands or institute preliminary relief proceedings.
Frequently asked questions about money loan agreements in the Netherlands
Is a verbal loan agreement valid in the Netherlands?
Yes, in principle. Dutch law does not require a particular form unless the law provides otherwise (Article 3:37(1) DCC). Exceptions are a private lender, who is only bound once the money has been provided or he has committed in writing (Article 7:129b), and interest between private individuals, which must be agreed in writing (Article 7:129c(1)). Proving a verbal loan is difficult, so put it in writing.
Does a private loan in the Netherlands carry interest?
Only if it has been agreed in writing, where both parties are private individuals (Article 7:129c(1) DCC). In all other cases, interest is due unless it follows from the agreement that no interest is due (Article 7:129c(2)). If no rate was agreed, the statutory interest rate applies (Article 7:129d).
How long does a borrower have to repay a loan without a repayment date?
Six weeks after the lender has given notice that it demands repayment, unless a different time follows from the agreement (Article 7:129e DCC). For a loan to be repaid “when the borrower is able to”, the court can set the date (Article 7:129f).
How long can a lender claim repayment of a loan?
A claim for performance of a contractual obligation is time-barred five years after the start of the day following the day on which it became due (Article 3:307(1) DCC). For a loan without a fixed repayment date, that period only runs from the start of the day following the day as of which the lender demanded repayment, and in any event twenty years after the start of the day following the earliest day as of which repayment could have been demanded (Article 3:307(2)). Interest claims are time-barred after five years (Article 3:308).
Is a signed acknowledgement of debt enough evidence?
Usually it is strong evidence: between the parties, a signed deed provides compelling evidence of the statement it is meant to prove (Article 157(2) DCCP). For a one-sided deed by a private borrower, it must be handwritten in full or carry an approval with the amount written in letters (Article 158 DCCP). The borrower may still prove the contrary (Article 151(2) DCCP).
Primary sources
- Dutch Civil Code, Book 3: Articles 3:37, 3:227, 3:307 and 3:308
- Dutch Civil Code, Book 6: Articles 6:119, 6:119a and 6:120
- Dutch Civil Code, Book 7, Title 2C (money loan): Articles 7:129, 7:129a, 7:129b, 7:129c, 7:129d, 7:129e and 7:129f
- Dutch Code of Civil Procedure: Articles 79, 93, 151, 156, 157, 158, 255 and 700
Need a Dutch lawyer for a loan agreement?
Do you have any questions regarding a loan agreement or do you need specific legal advice regarding contract law in Holland? Our English-speaking lawyers in the Netherlands will be happy to help you.
