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Non-performance of a contract (a tekortkoming, often called wanprestatie) means that a party does not perform an obligation, performs it too late or performs it improperly. Under Dutch law, the other party can then claim performance, suspend its own performance, claim damages or terminate the contract. Damages and termination usually require a written notice of default first (Article 6:82 Dutch Civil Code, DCC).
This page explains what counts as non-performance, when you need to send a notice of default (ingebrekestelling) and which remedies you have. Our attorneys in the Netherlands at MAAK Advocaten advise foreign businesses on contracts governed by Dutch law.
What counts as non-performance under Dutch law?
Dutch law uses one concept for every failure to perform a contract: a failure in performance (tekortkoming) (Article 6:74(1) DCC). In Dutch it is often called niet-nakoming or wanprestatie. A failure does not have to be the debtor’s fault to count as non-performance. Whether it can be attributed to the debtor only matters for some remedies, such as damages. In cross-border transactions, businesses regularly have to deal with customers or suppliers that do not perform as agreed.
A failure can take three forms: the debtor does not perform at all, performs too late, or performs improperly, for example by delivering defective goods. Non-performance can disrupt supply chains and cause unnecessary costs. Which remedies you have depends on the form of the failure, on whether it can be attributed to the debtor and on what the contract says.
When do you need to send a contract default notice?
For damages and termination, the debtor must usually be in default (verzuim). Default arises when you send the debtor a written notice of default (ingebrekestelling) that gives it a reasonable period to perform, and performance does not follow within that period (Article 6:82(1) DCC). The debtor is not in default, however, insofar as the delay cannot be attributed to it or performance is already permanently impossible (Article 6:81 DCC). The law does not set a fixed period. What is reasonable depends on the circumstances, such as the nature of the performance. If the debtor is temporarily unable to perform, or its attitude shows that a reminder would be useless, a written statement holding it liable for the failure to perform is enough (Article 6:82(2) DCC).
Default arises without a notice of default (Article 6:83 DCC):
- when a fixed deadline for performance expires without performance, unless it appears that the deadline has a different purpose;
- when the obligation arises from a tort (onrechtmatige daad) or is an obligation to pay damages under Article 6:74(1) DCC, and it is not performed immediately;
- when you must infer from a statement of the debtor that it will fail to perform.
You also do not need a notice of default to claim damages if performance has become permanently impossible (Article 6:74(2) DCC), or to terminate the contract if performance is permanently or temporarily impossible (Article 6:265(2) DCC). Nor do you need one to claim performance of an obligation that has fallen due, or to suspend your own performance. For the conditions of suspension, see our page on the right of suspension in the Netherlands.
A notice of default must be in writing (Article 6:82(1) DCC). Send it in a way that lets you prove it was received, because a statement addressed to a person only takes effect once it has reached that person. A statement that did not reach the addressee, or not in time, can still take effect if this is due to the addressee’s own act, to persons for whom it is responsible or to other circumstances concerning it that justify it bearing the disadvantage (Article 3:37(3) DCC). Describe the failure as precisely as possible: what is missing or defective, what you expect the debtor to do and by which date.
Do not confuse the notice of default with the duty to complain. If the performance is defective, you must protest to the debtor within a reasonable time after you discovered the defect or reasonably should have discovered it. Otherwise you can no longer rely on the defect (Article 6:89 DCC). For the sale of goods, Article 7:23(1) DCC contains its own rule: the buyer must notify the seller within a reasonable time after it discovered, or reasonably should have discovered, that the goods do not conform to the contract. If the goods lack a property the seller said they had, or the seller knew or should have known facts it did not disclose, the reasonable time runs from discovery. In a consumer sale, the reasonable time also runs from discovery, and notice within two months of discovery is timely.
The English-speaking attorneys of MAAK Advocaten can draft a notice of default for you and advise on the next steps in a cross-border contract dispute.
Which remedies do you have for non-performance under Dutch law?
Under Dutch contract law, a failure in performance can give rise to several remedies. Some can be combined, for example termination and damages.
- Performance: at the request of the creditor, the court orders the debtor to do what it is obliged to do, unless the law, the nature of the obligation or a juristic act provides otherwise (Article 3:296(1) DCC).
- Suspension: in a contract with obligations on both sides, you may suspend your own performance while the other party does not perform. If the other party performs only partly or improperly, only to the extent the failure justifies it (Article 6:262 DCC).
- Damages: the debtor must compensate the loss caused by the failure, unless the failure cannot be attributed to it (Article 6:74(1) DCC). Insofar as performance is not already permanently impossible, this only applies once the debtor is in default (Article 6:74(2) DCC).
- Replacement damages: insofar as performance is not already permanently impossible, the obligation is converted into an obligation to pay replacement damages when the debtor is in default and you notify it in writing that you claim damages instead of performance. This does not apply if the failure, given its minor significance, does not justify it (Article 6:87 DCC).
- Termination: every failure in performance gives the other party the right to terminate the contract in whole or in part, unless the failure, given its special nature or minor significance, does not justify termination with its consequences (Article 6:265(1) DCC). Insofar as performance is not permanently or temporarily impossible, this right only arises once the debtor is in default (Article 6:265(2) DCC). You terminate by a written statement, or the court pronounces termination on your claim (Article 6:267 DCC). Termination releases the parties from the obligations affected by it; performances already received must be undone (Article 6:271 DCC). The party whose failure gave grounds for termination must compensate the loss caused by the termination; if that failure cannot be attributed to it, a narrower rule applies (Article 6:277 DCC). Special rules apply to some contracts, such as employment contracts and leases.
Attribution matters for damages. A failure cannot be attributed to the debtor if it is not due to its fault and is not for its account under the law, a juristic act or generally accepted views (force majeure, overmacht) (Article 6:75 DCC). A debtor that uses other persons to perform its obligation is liable for their conduct in the same way as for its own conduct (Article 6:76 DCC). If the failure cannot be attributed to the debtor, you cannot claim damages for it, but the other remedies, such as termination and suspension, usually remain available.
What is a non-performance clause in a contract?
Many contracts regulate the consequences of non-performance themselves. Common examples are:
- Penalty clause (boetebeding): the debtor that fails to perform must pay a sum of money or render another performance (Article 6:91 DCC). Unless the contract provides otherwise, the penalty replaces the statutory damages, and it cannot be claimed if the failure cannot be attributed to the debtor (Article 6:92(2)-(3) DCC). At the debtor’s request, the court can reduce the penalty if fairness manifestly requires this, but not below the statutory damages (Article 6:94(1) DCC). Read more about penalties under Dutch law.
- Force majeure clause: a failure cannot be attributed to the debtor if it is not due to its fault and is not for its account under the law, a juristic act or generally accepted views (Article 6:75 DCC). Because a juristic act such as the contract itself helps determine which risks are for the debtor’s account, a contract can define which events count as force majeure and which risks a party bears.
- Limitation of liability: contracts often limit or exclude damages. If Dutch law applies, such a clause does not apply to the extent that this would be unacceptable by standards of reasonableness and fairness in the circumstances (Article 6:248(2) DCC).
Always check these clauses before you send a notice of default or terminate, because they can change both the procedure and the amount you can claim. For a broader overview, see our page on breach of contract under Dutch law.
Do you want to terminate a contract under Dutch law for breach of contract or do you have another question about (cross-border) contracts? You are welcome to contact our English-speaking lawyers in Amsterdam.
Frequently asked questions about non-performance of contractual claims under Dutch law
What is non-performance of a contract under Dutch law?
It is a failure in performance (tekortkoming): a party does not perform an obligation, performs too late or performs improperly (Article 6:74(1) DCC). The other party can claim performance, suspend its own performance or, usually after a notice of default, terminate the contract. Damages are only due if the failure can be attributed to the debtor (Articles 6:74 and 6:75 DCC).
What is a contract default notice and what should it contain?
A notice of default (ingebrekestelling) is a written demand that gives the debtor a reasonable period to perform. If the debtor does not perform within that period, it is in default (Article 6:82(1) DCC), unless the delay cannot be attributed to it or performance is already permanently impossible (Article 6:81 DCC). State the obligation, the failure, what you expect and the deadline, and send it in a way that lets you prove receipt (Article 3:37(3) DCC).
When is a notice of default not needed?
Default arises without notice when a fixed deadline for performance expires (unless it appears to have a different purpose), when an obligation to pay damages or an obligation arising from a tort is not performed immediately, or when a statement of the debtor shows it will fail to perform (Article 6:83 DCC). For damages, no default is needed if performance has become permanently impossible (Article 6:74(2) DCC).
What is a non-performance clause in a contract?
It is a clause that regulates what happens if a party fails to perform, such as a penalty clause, a force majeure clause or a limitation of liability. Unless agreed otherwise, a penalty replaces the statutory damages (Article 6:92(2) DCC). The court can reduce a penalty at the debtor’s request if fairness manifestly requires this, but not below the statutory damages (Article 6:94(1) DCC).
Can you terminate a contract for non-performance under Dutch law?
Yes. Every failure in performance gives the right to terminate, unless the failure, given its special nature or minor significance, does not justify termination with its consequences (Article 6:265(1) DCC). Usually the debtor must first be in default (Article 6:265(2) DCC). You terminate by a written statement, or the court can pronounce termination on your claim (Article 6:267 DCC).
Primary sources
- Dutch Civil Code (Burgerlijk Wetboek), Book 3: Articles 3:37 and 3:296
- Dutch Civil Code, Book 6: Articles 6:74, 6:75, 6:76, 6:82, 6:83, 6:87, 6:89, 6:91, 6:92, 6:94, 6:248, 6:262, 6:265, 6:267, 6:271 and 6:277
- Dutch Civil Code, Book 7: Article 7:23
Contract lawyers in the Netherlands
Do you have questions about non-performance of a contract under Dutch law, or do you need advice on a specific case? Our English-speaking contract lawyers will be happy to help you.
