Published on · Last updated
Under Dutch law, a third-party clause (derdenbeding) is a term in a contract by which two parties give a third person the right to claim performance from one of them, or to rely on the contract in another way, for example on an exclusion of liability. The third party acquires that right once it accepts the clause (Article 6:253(1) Dutch Civil Code).
The decisive question is whether the contract contains a term that is meant to give the third party its own right. That is a matter of interpreting the contract (Court of Appeal Amsterdam 8 March 2011, ECLI:NL:GHAMS:2011:BR1901, r.o. 3.5.1). Merely naming a third party as the address for payment is not enough.
How does the legal structure of a third-party beneficiary clause work under Dutch law?
A third-party beneficiary clause under Dutch law creates a unique three-party relationship in Dutch contract law. Each involved person has a specific role and designation:
The stipulator (bedinger) is the contracting party who stipulates that the other party must perform for the benefit of a third party. For example, an entrepreneur who takes out life insurance for the benefit of relatives.
The promisor (obligor) promises to perform the obligation for the benefit of the third party. Typically, this is an insurance company or service provider that commits to payment or delivery to the beneficiary.
The third party (derde) receives the right to claim performance without having concluded the contract. It acquires that right once it accepts the clause, and then counts as a party to the contract (Article 6:254(1)).
This structure differs from an ordinary two-party contract because a person who did not negotiate the contract nevertheless acquires its own right. Once the third party has accepted the clause, it counts as a party to the contract (Article 6:254(1)).
In business, the construction is used where one party wants a contract partner to perform directly for someone else, such as a customer, a subcontractor or a group company.
What conditions apply for a valid third-party beneficiary clause in Dutch law?
Under Article 6:253 Dutch Civil Code and general contract law, the following is required:
- A contract between the stipulator and the promisor (promissor). The clause is part of that contract. The normal rules on formation and validity apply, for example offer and acceptance (Article 6:217).
- A term intended to give the third party a right: a right to claim performance or to rely on the contract in another way (Article 6:253(1)). Whether the contract contains such a term is a matter of interpretation. The Amsterdam Court of Appeal held that the mere wording “Media invoices: [SVB]” in an order confirmation did not give SVB its own claim (see below).
- An identifiable third party. In practice the clause names the third party or describes it, for example “my children”. If the clause has no effect for the third party, the stipulator can designate itself or another third party (Article 6:255).
- Acceptance by the third party. Acceptance is a declaration to the stipulator or the promisor (Article 6:253(3)). Until acceptance, the stipulator can revoke the clause (Article 6:253(2)).
Article 6:253 does not require the stipulator to have a personal interest in the clause.
Most disputes are about the second requirement: did the parties really mean to give the third party its own right? Clear wording avoids that discussion.
What happens upon acceptance by the beneficiary according to Dutch legislation?
Acceptance by the third party is the moment at which the clause becomes binding for it. After acceptance, the third party counts as a party to the contract (Article 6:254(1)), and the stipulator can no longer revoke the clause (Article 6:253(2)). If this fits the purpose of the clause, the third party can also derive rights from it for the period before acceptance (Article 6:254(2)).
The main consequences of acceptance are:
No revocation: The stipulator can only revoke the clause until acceptance (Article 6:253(2)). Because the third party then counts as a party, the clause can as a rule no longer be changed without its cooperation.
Direct claim: The beneficiary can directly approach the promisor without involving the stipulator. In life insurance situations, this means surviving dependents can claim directly from the insurer without involving heirs or executors.
Own right: The right belongs to the third party, not to the stipulator (Article 6:253(1)). The stipulator can still claim performance to the third party, unless the third party objects (Article 6:256).
The parties can make the clause irrevocable. If an irrevocable clause is made for the third party free of charge (om niet), it counts as accepted once it has come to the third party’s knowledge and the third party has not rejected it without delay (Article 6:253(4)).
Acceptance does not have to be in writing. It is a declaration to the stipulator or the promisor (Article 6:253(3)), which can be made in any form and can follow from conduct (Article 3:37(1)), for example by claiming performance from the promisor. Life insurance has its own rule: the beneficiary can only accept by a declaration to the insurer and, as long as the designation can still be revoked, only in writing with the policyholder’s consent, also notified in writing to the insurer (Article 7:969(1)).
Would you like certainty about the legal validity of a third-party beneficiary clause in your contracts? Our specialized lawyers analyze your agreement and advise on the optimal legal structure for your specific situation.
How does a third-party beneficiary clause relate to a payment address under Dutch law?
The Amsterdam Court of Appeal drew the line between a third-party clause and a mere payment arrangement in a judgment of 8 March 2011 (ECLI:NL:GHAMS:2011:BR1901). A designation as payment address does not by itself confer an independent claim right.
Advertising agency Rappange had a cooperation agreement with media agency SVB, which bought media space for Rappange’s clients and invoiced those clients directly. Rappange’s order confirmation to its client stated: “Media invoices: [SVB] Rappange Advertising”. When invoices remained unpaid, SVB sued the client, Sama B.V. The district court allowed the claim, holding that the reference to SVB was a third-party clause.
The Court of Appeal disagreed. The mere fact that SVB was entitled to send invoices directly to Rappange’s clients and to receive payments did not mean that it had its own claim; this pointed rather to a payment address (r.o. 3.5.3). The claim against Sama B.V. also failed for a different reason: the court found that the relevant orders had not been placed by Sama B.V. but by a separate partnership (r.o. 3.10).
The difference in practice:
With a payment address, a third party may send invoices and collect payments on behalf of the contracting party. The underlying legal relationship remains between the original contracting parties. The third party merely acts as administrative intermediary or agent.
With a third-party beneficiary clause, the third party acquires its own claim against the promisor, separate from the stipulator’s claim. This third party can independently litigate, execute and, if necessary, attach assets of the promisor.
The court added that Rappange might have authorised SVB to collect its claims in SVB’s own name (assignment for collection, cessie ter incasso), but SVB had not argued this (r.o. 3.8).
This jurisprudence shows that entrepreneurs must word things carefully when involving a third party in contractual relationships. A lawyer specializing in contract law prevents costly legal procedures by using proper terminology in advance.
What role does a third-party beneficiary clause play in life insurance under Dutch law?
Life insurance is the classic example of a third-party clause in Dutch law. The policyholder can designate one or more third parties as beneficiary (begunstigde) by written notice to the insurer (Article 7:966(1) Dutch Civil Code). Articles 7:966 to 7:969 contain special rules, which partly deviate from Article 6:253.
The practical operation proceeds as follows: An Amsterdam entrepreneur (stipulator) takes out life insurance with an insurer (promisor) and designates their partner or children as beneficiary (begunstigde). Upon death of the policyholder, beneficiaries can claim the payout directly from the insurer.
The beneficiary acquires the right to payment by accepting the designation (Article 7:969(1)). Acceptance must be addressed to the insurer. As long as the designation can still be revoked, the beneficiary can only accept in writing with the policyholder’s consent, also notified in writing to the insurer. The designation can no longer be revoked once the beneficiary has accepted it, the insured person has died, a payment has become due, or the contract so provides (Article 7:968). Another clause that shifts the balance between parties is the hardship clause under Dutch law.
Because the beneficiary acquires its own right under the insurance contract, the insurer pays the beneficiary directly. Whether heirs or creditors of the policyholder can still make claims in connection with the policy depends on special rules of inheritance and insurance law, which are not covered here.
What are the consequences for matrimonial property law in the Netherlands?
Third-party beneficiary clauses under Dutch law can have far-reaching consequences for matrimonial property law, especially regarding life insurance and other wealth accumulation. Article 1:87 Dutch Civil Code governs when one spouse owes the other compensation (vergoedingsrecht) because the other spouse’s assets were used.
Example: spouse A takes out life insurance for the benefit of a third party and pays the premiums from the assets of spouse B. A may then owe B compensation. The question is how that compensation is valued.
The law treats the moment at which a beneficiary designation becomes irrevocable as an alienation of the asset (Article 1:87(3)(c)). The compensation is then based on the value at that moment, instead of the value at the time the compensation is paid (Article 1:87(2)). This applies to beneficiary designations under a sum insurance and to other third-party clauses. If the other spouse’s assets were used without that spouse’s consent, the compensation is at least the nominal amount paid (Article 1:87(3)(a)). Spouses can agree otherwise (Article 1:87(4)), and similar valuation rules apply where community property was used (Article 1:95).
How does the three-party relationship arise legally under Dutch law?
A third-party beneficiary clause creates three separate legal relationships, each with distinct characteristics and legal consequences. This tripartite structure distinguishes the third-party beneficiary clause from ordinary two-party agreements and requires careful juridical analysis.
The coverage relationship (dekkingsverhouding) exists between stipulator and promisor. This is the contract that contains the third-party clause. The normal rules of contract law apply, for example that the content may not be contrary to good morals or public policy (Article 3:40) and that the obligations must be determinable (Article 6:227). The third party’s right derives from this contract.
The value relationship (valutaverhouding) connects stipulator and third party. It explains why the stipulator wants to benefit the third party, for example as a gift or to pay a debt it owes to the third party.
The execution relationship arises between promisor and third party once the third party accepts. Here the third party acquires its claim against the promisor. After acceptance, the third party counts as a party to the contract (Article 6:254(1)) and can bring proceedings itself.
Important: because the third party’s right derives from the contract between stipulator and promisor, the promisor can in principle raise defences arising from that contract against the third party as well. A third party must therefore take into account possible defects in the main contract.
What practical applications exist beyond life insurance in the Dutch jurisdiction?
Although life insurance forms the most familiar example, Dutch law recognizes numerous other applications of third-party beneficiary clauses in commercial relationships. Entrepreneurs regularly use this construction to legally structure complex three-party relationships.
Transport contracts can contain a clause by which the shipper (stipulator) agrees with the carrier (promisor) that the consignee (third party) can claim delivery of the goods. The Supreme Court referred to such a stipulation in the Citronas case (HR 20 June 1986, ECLI:NL:HR:1986:AD5694, r.o. 3.6).
Construction contracts can provide that subcontractors may claim payment directly from the client. Whether a subcontractor really acquires its own claim depends on the wording; a mere payment arrangement is not enough (see the Amsterdam case above).
Franchise agreements sometimes contain clauses where the franchisor (stipulator) agrees with the franchisee (promisor) that customers (beneficiaries) can exercise certain rights. For example, product warranties directly enforceable against the franchisee.
These examples show that the third-party clause is a flexible instrument. Careful wording remains essential: unclear wording leads to disputes about whether a third-party clause was really intended.
Can a third party rely on an exclusion clause in someone else’s contract?
As a rule, contract terms only have effect between the parties that agreed them (HR 20 June 1986, Citronas, r.o. 3.4). An exclusion or limitation of liability (exoneratiebeding) can still work for or against a third party in three ways.
A third-party clause. Article 6:253(1) also covers a clause that allows a third party to rely on the contract “in another way”, for example a clause that extends an exclusion of liability to the subcontractors of one of the parties. As with any third-party clause, the third party must accept it.
Employees. If a party could rely on a defence in the contract to avoid liability for the conduct of its employee or other subordinate (ondergeschikte), that subordinate can invoke the same defence when the other party sues it for that conduct, as if it were a party to the contract itself (Article 6:257 Dutch Civil Code). The article only covers subordinates.
Other cases. A third party may in reasonableness have to accept a clause in a contract it is not party to, but only if the nature of the case justifies it. The Supreme Court mentions, among other things, trust created by conduct of the third party that the clause could be invoked, the nature of the contract and the clause in connection with the special relationship between the third party and the party invoking the clause, and the statutory system (Citronas, r.o. 3.4). The mere fact that a business uses general terms with such a clause, even if such clauses are common in the sector, is not enough (r.o. 3.5).
Group companies cannot simply rely on each other’s exclusion clauses. In Edco, a parent company owned a warehouse used by its subsidiary for storing customers’ goods. When the roof collapsed, a customer sued the parent company. The Supreme Court upheld the Court of Appeal’s judgment that the parent company could not invoke the exclusion clause in the storage contract between its subsidiary and the customer (HR 26 November 2010, ECLI:NL:HR:2010:BM9757, r.o. 3.2.2–3.2.3).
Whether the exclusion clause itself is valid is a separate question. If Dutch law applies, a court can set it aside to the extent that relying on it would be unacceptable by standards of reasonableness and fairness (Article 6:248(2)), and a clause contrary to good morals or public policy is void (Article 3:40(1)). The rules on general terms and conditions (Articles 6:231 to 6:247) do not apply between businesses that are not both established in the Netherlands (Article 6:247(2)).
Frequently asked questions about third-party clauses under Dutch law
Does the third party have to sign the contract?
No. The third party acquires its right by accepting the clause, by a declaration to the stipulator or the promisor (Article 6:253(1) and (3) Dutch Civil Code). That declaration can be made in any form (Article 3:37(1)). For life insurance, acceptance must be addressed to the insurer and, while the designation is still revocable, be made in writing with the policyholder’s written consent (Article 7:969(1)).
Can a third-party clause be revoked?
The stipulator can revoke the clause until the third party accepts it (Article 6:253(2)). An irrevocable clause made free of charge counts as accepted once the third party knows of it and does not reject it without delay (Article 6:253(4)).
Is naming a payment address in a contract a third-party clause?
Not by itself. The Amsterdam Court of Appeal held that the right to send invoices and receive payments did not give the named company its own claim (Court of Appeal Amsterdam 8 March 2011, ECLI:NL:GHAMS:2011:BR1901, r.o. 3.5.3).
Can the stipulator still claim performance for the third party?
Yes. The party that made the clause can demand performance to the third party, unless the third party objects (Article 6:256 Dutch Civil Code).
Can an employee rely on the employer’s exclusion clause?
Yes. If the employer could rely on a defence in the contract against liability for the employee’s conduct, the employee can invoke that defence when the other contracting party sues it for that conduct (Article 6:257 Dutch Civil Code).
Primary sources
- Dutch Civil Code (Burgerlijk Wetboek) Book 6: Articles 6:217, 6:227, 6:247, 6:248, 6:253, 6:254, 6:255, 6:256 and 6:257
- Dutch Civil Code Book 7: Articles 7:966, 7:968 and 7:969
- Dutch Civil Code Books 1 and 3: Articles 1:87, 1:95, 3:37 and 3:40
- Court of Appeal Amsterdam 8 March 2011, ECLI:NL:GHAMS:2011:BR1901
- Supreme Court (Hoge Raad) 20 June 1986, ECLI:NL:HR:1986:AD5694 (Citronas)
- Supreme Court (Hoge Raad) 26 November 2010, ECLI:NL:HR:2010:BM9757 (Edco)
Contact our law firm for personal legal advice about applying third-party beneficiary clauses in your specific contractual situation. Our contract law specialists assist you in drafting watertight clauses that optimally support your commercial objectives.
