A perpetual clause under Dutch law is an obligation in an agreement to impose particular obligations on a subsequent owner or legal successor. This means that agreements can also be made with parties who are not yet parties at the time the agreement is concluded. It usually concerns the obligation of legal successors to tolerate or refrain from doing something. Sometimes, however, it is the obligation to do something. Such provisions are particularly common in property transactions and company takeovers. Our contract lawyer in the Netherlands in contract law zooms in on this clause
Not automatically bound by a perpetual clause in the Netherlands
The legal successor is not automatically bound by the obligations of a regular perpetual clause under Dutch law. It is required that the re-selling party bound by the perpetual clause imposes this obligation on the new acquirer. A penalty clause is often included to effectively enforce that the re-selling party does so. If the obligations are not included for the legal successor, the original seller can only claim the re-selling party for breach of contract.
Explanation of a perpetual clause
Because perpetual clauses under Dutch law can remain in effect for years and impact many other parties, it is recommended to make these provisions as clear as possible. However, the clause should not be interpreted solely on the basis of the linguistic meaning of its wording. As with almost all contracts under Dutch law, all circumstances of the case, assessed according to what reasonableness and fairness require, are of decisive importance.
In the case of transfer of real estate, the law has the possibility of automatically binding legal successors to a perpetual clause. In that case, there is a qualitative obligation within the meaning of Book 6, Article 252 of the Civil Code. For a qualitative obligation to be effective, it must be recorded by a notary in a notarial deed and also be registered in the public registers. However, the qualitative obligation can only be agreed for obligations to tolerate or refrain from doing something. Due to key differences with the perpetual clause, it is important not to confuse them.
Dutch lawyer specialized in contract law
Do you have any questions or a dispute regarding a perpetual clause under Dutch law or do you need specific legal advice regarding contract law in Holland? Our experienced Dutch specialist lawyers in Holland will be happy to help you.