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Was your contract with a Dutch company signed by someone who turns out to have no authority? Under Dutch law, the company is then in principle not bound. It is bound only if it ratifies the contract (Article 3:69 Dutch Civil Code), or if you reasonably relied on an appearance of authority that the company created or that falls within its risk (Article 3:61(2)). Otherwise you can hold the signatory personally liable (Article 3:70).
This page is for foreign businesses that contract with Dutch companies and want to know who can sign, what happens when the wrong person signs, and what to check before signing. It is also relevant if someone in your own Dutch subsidiary signed without authority. The rules on granting a power of attorney itself are covered in what is a valid power of attorney under Dutch law.
Who can sign a contract for a Dutch company?
For a Dutch private company (BV), the board represents the company, and so does each individual director, unless the articles of association reserve that authority to one or more named directors or provide that a director may only act jointly with others (Article 2:240(1) and (2) Dutch Civil Code). The same rules apply to a public company (NV) under Article 2:130.
A director’s authority is unlimited and unconditional, except where the law provides otherwise. A restriction that the law permits, such as a joint-signature clause in the articles, can be invoked by the company against you; other internal restrictions do not affect a director’s authority towards you (Article 2:240(3)). The articles can also give authority to persons other than directors (Article 2:240(4)).
Everyone else who signs for the company, such as a sales director, purchasing manager or branch manager, needs a power of attorney (volmacht): the authority to perform legal acts in the company’s name (Article 3:60). It can be granted expressly or tacitly (Article 3:61(1)), so it does not have to be in writing. Dutch companies often register such proxy holders, with the limits of their authority, in the commercial register of the Chamber of Commerce (KvK). More on this in our article on corporate power of attorney in the Netherlands.
Which law decides whether the signatory could bind the company?
The fact that your contract is governed by English or German law does not settle who could sign for the Dutch company. The Rome I Regulation, which determines the law applicable to the contract, expressly excludes the question whether an agent or an organ can bind a principal or company towards a third party (Rome I Regulation, Article 1(2)(f) and (g)).
A Dutch court applies the law under which the company was incorporated to the authority of its directors and other organs (Article 10:119(c) Dutch Civil Code). For a Dutch BV or NV, the authority of its directors is therefore governed by Dutch law. For representation by an agent, the Dutch court determines the applicable law under the 1978 Hague Convention on the Law Applicable to Agency (Article 10:125). The rest of this page explains the Dutch rules; see also our page on choosing Dutch law in international contracts.
When is a Dutch company bound even though the signatory had no authority?
The company is bound if you assumed, on the basis of a statement or conduct of the company, and could reasonably assume in the circumstances, that the signatory had sufficient authority (Article 3:61(2) Dutch Civil Code). The company then cannot rely on the lack of authority against you.
According to the Hoge Raad (Dutch Supreme Court), that appearance can also be attributed to the company if your trust rests on facts and circumstances that are at the company’s risk and from which, according to generally accepted views, an appearance of authority can be derived (HR 11 March 2011, ECLI:NL:HR:2011:BN9967, para. 3.8). Either way, the trust must rest on something on the company’s side, not only on what the signatory said about himself.
Typical examples are a job title the company gave the person, business cards or letterhead the company provided, or earlier contracts the company performed without objection. If a published power of attorney contains restrictions so unusual that you did not need to expect them, they cannot be held against you unless you knew them (Article 3:61(3)).
The commercial register helps you in two ways. A company cannot invoke a fact that had to be registered against a third party that was unaware of it, as long as it was not registered, for example the dismissal of a director. Nor can it hold an incorrect or incomplete registration against such a third party (Article 25(1) and (3) Commercial Register Act 2007).
Is the person who signed without authority personally liable?
Yes, as a rule. Whoever acts as an agent warrants to the other party that the power of attorney exists and covers the act (Article 3:70 Dutch Civil Code). If the company is not bound, you can claim damages from that person.
There are two exceptions: you knew or should have understood that sufficient authority was lacking, or the agent had fully informed you of the content of the power of attorney (Article 3:70). The claim is for damages; it does not make the agent a party to the contract. In practice, the value of the claim depends on whether the person can pay.
Can the Dutch company still ratify the contract?
Yes. The company in whose name someone acted without authority can ratify the contract, which then has the same effect as if the agent had been authorised (Article 3:69(1) Dutch Civil Code). Apart from the case in paragraph 2 below, Article 3:69 prescribes no form, so besides an express statement, conduct such as knowingly performing the contract may amount to ratification, depending on the circumstances.
As the other party, you do not have to wait indefinitely: you can set the company a reasonable period for ratification (Article 3:69(4)). Ratification no longer has effect once you have stated that you regard the contract as invalid for lack of authority, unless you understood or should have understood at the time of signing that sufficient authority was lacking (Article 3:69(3)). If a specific form is required for granting the power of attorney, the same form applies to ratification (Article 3:69(2)).
Need certainty about a contract signed on behalf of a Dutch company? We can assess whether the company is bound and what you should send it first. Read more about our work as a contract lawyer in the Netherlands.
What should you check before signing with a Dutch company?
Check the signatory’s authority before you sign, not after a dispute arises. For important contracts, the steps below take little time and remove most of the risk:
- Request a recent extract from the Dutch commercial register (KvK) and check who is registered as director or proxy holder, and whether they may act alone.
- For larger transactions, ask for the articles of association or a board resolution approving the contract.
- If a manager signs, ask for a copy of the power of attorney and check that it covers the type and value of the contract.
- Make sure the contract states in whose name the signatory acts. Someone who signs for a principal “to be named later” is, unless the contract provides otherwise, personally bound if the name is not given in time (Article 3:67).
- Keep e-mails and earlier contracts that show the company accepted this person’s role; they may later support an appearance of authority.
Example: a purchasing manager signs a framework agreement by e-mail
Suppose (illustration) a Belgian supplier agrees a three-year framework agreement with a Dutch BV by e-mail. The Dutch purchasing manager signs it; the commercial register shows only the managing director as authorised. A year later, the BV stops ordering and claims it was never bound.
The supplier will first look for a statement or conduct of the BV: had it given the manager this role in earlier contracts, did it place and pay orders under the framework agreement, did the managing director know of the negotiations? If so, the supplier may rely on an appearance of authority (Article 3:61(2)) or on ratification by performance (Article 3:69). If not, its claim lies against the manager personally (Article 3:70). Asking the managing director to countersign would have avoided the question.
When should you involve a Dutch lawyer?
Involve a Dutch lawyer as soon as a Dutch company says it is not bound because the wrong person signed, or before you rely on a contract signed by a manager for a significant amount. The first steps, such as setting a period for ratification or putting the company on notice, determine your position later.
MAAK Advocaten advises foreign companies on contracts with Dutch counterparties and acts for them in proceedings before the Dutch courts in first instance and on appeal. Related questions at the formation stage are discussed in our article on abuse of circumstances when concluding a Dutch contract.
Frequently asked questions about unauthorised representation under Dutch law
Is a Dutch company bound by a contract signed by an employee without authority?
In principle not. The company is bound only if it ratifies the contract (Article 3:69 Dutch Civil Code) or if you reasonably relied on an appearance of authority based on its statements or conduct, or on circumstances at its risk (Article 3:61(2)).
Can one director sign for a Dutch BV?
Yes, unless the articles of association reserve representation to other directors or require joint signature. Under Article 2:240 Dutch Civil Code, the board and each individual director can represent the BV. Check the commercial register extract, which shows whether a director may act alone.
What can I do if the Dutch company neither confirms nor rejects the contract?
Set the company a reasonable period in writing within which it must ratify the contract (Article 3:69(4) Dutch Civil Code). As a rule, silence does not amount to ratification, and once the period has passed without ratification you can treat the company as not bound and turn to the signatory.
Who is liable if the company is not bound?
The person who signed as agent, as a rule. Under Article 3:70 Dutch Civil Code, an agent warrants the existence and scope of the power of attorney, unless you knew or should have understood that it was lacking, or the agent fully disclosed its content to you.
Does it matter that our contract is governed by foreign law?
For the authority of a Dutch company’s directors, no: a Dutch court applies the law of the country of incorporation (Article 10:119(c) Dutch Civil Code). The Rome I Regulation does not cover this question (Article 1(2)(f) and (g)).
Primary sources
Dutch statutes are only officially available in Dutch, on wetten.overheid.nl. Judgments can be found on rechtspraak.nl by their ECLI number.
- Dutch Civil Code (Burgerlijk Wetboek) Book 2: Article 2:130 and Article 2:240
- Dutch Civil Code Book 3: Article 3:60, Article 3:61, Article 3:67, Article 3:69 and Article 3:70
- Dutch Civil Code Book 10: Article 10:119 and Article 10:125
- Commercial Register Act 2007 (Handelsregisterwet 2007): Article 25
- Rome I Regulation (Regulation (EC) No 593/2008): Article 1(2)(f) and (g)
- Hoge Raad 11 March 2011, ECLI:NL:HR:2011:BN9967
