As contract lawyers in the Netherlands, we regularly hear questions such as: “When can a Dutch contract be terminated?” and “what are the consequences of terminating a sales contract in the Netherlands?”. In the following, we will outline some of these recurring issues in our practice regarding the termination of a contract under Dutch law. What we as contract lawyers often see is that legal terminology gets confused. In the Netherlands, three legal terms are used to describe the termination of a contract, all of which describe “the divergence of the parties to the contract”. However, if you wish to end your cooperation with a party to a contract in the Netherlands, it is better not to use the term termination. From a legal point of view, this is not a well-defined concept and may be a source of confusion and necessitate discussion with a specialist.
Dissolution, termination or cancellation: what is the legal difference?
If your contractor fails to perform – for example, they do not deliver, does not deliver on time, the delivery is defective, and/or there are indications that the delivery will not be (properly) made – this could possibly justify a termination of contract. Termination of the agreement in accordance with Dutch law requires a breach of contract and is only permissible if notice of default has been given in advance. This means that, as a rule, after a reminder or notification/determination has been served that no service will be provided, the service must still be provided before further legal action can be taken
As a contract lawyer, we regularly advise our international clients on the question of whether there is a possibility to dissolve a Dutch agreement, what the chances of success and what risks are and what other legal remedies are available. We prepare the necessary correspondence in Dutch, after we have discussed a number of considerations with our clients in order to arrive at an efficient and cost-effective solution.
Dissolution of a purchase agreement under Dutch law
According to the Dutch Civil Code, you usually dissolve a purchase agreement under Dutch law if you are dissatisfied with a (non-)delivered product or a (non-)delivered service. Regardless of whether it is a machine that is not in accordance with what is stated in the agreement, or a collaboration that is no longer profitable, the law offers the affected party the opportunity to (partially) dissolve the agreement.
Termination of a commercial contract under Dutch law
The termination of a commercial contract under Dutch law is another term that we often hear in connection with permanent agreements, also called term agreements, i.e. contracts that aim at continuous performance. This usually concerns distribution agreements, agency agreements or franchise agreements in the Netherlands. In addition, there are a number of purchase agreements that also lead to a long-term commercial relationship with one of the parties to the agreement. You can terminate these contracts if you do not wish to extend this cooperation (in which case no defect is required). Another reason could be that the other party has filed for insolvency or its assets have been seized. A pandemic can also hinder further cooperation, as is the case with the corona virus (COVID)-19). For a termination under Dutch law, it is advisable to include the grounds for termination in such an agreement especially as this is also an important indicator of whether and when you can legally terminate the agreement and whether there must be a good cause. Otherwise, you are obliged to pay compensation.
Dispute about terminating an agreement
If you have a dispute about terminating an agreement, our litigation lawyers will be happy to help. This dispute may be about the non-performance of a contract, but you may also differ on the interpretation of a contractual clause. Together with you, our Dutch lawyers will examine whether we need to conduct negotiations or prepare a procedure in the Netherlands.
Dutch lawyer specialized in commercial contracts
Do you have any questions about Dutch contract law or do you need specific legal advice in Holland on how to terminate a contract under Dutch law? Our experienced Dutch lawyer specialized in commercial contracts, Remko Roosjen, will be happy to help you.
Office: +31 (0)20 – 210 31 38