Dutch contract law is strongly influenced by the principle of freedom of contract. This means that parties are, subject only to overriding mandatory Dutch law, free to shape and determine the content of their agreements. Given that an agreement is a product of the intention of the parties, the parties are, in principle, free to vary, amend or terminate their agreements. However, it is crucial, any such variation, amendment or termination of an agreement also be based on a mutual meeting of the minds. In short, under Dutch law, the default procedure for the variation, amendment or termination of an agreement once it has been concluded is for the parties to enter into negotiations and to reach an agreement on the changes to their original agreement.
Wish for amendment to Dutch contract
Where a single party wishes to vary, amend or terminate an agreement without its counterparty’s consent, the freedom to do this is considerably more restricted under Dutch law. In principle, there are only two legal bases for a power of unilateral amendment: i) the inclusion of such a provision in the contract itself or ii) the existence of such a right under Dutch law. Since unilateral termination or amendment can have serious legal consequences under Dutch law it is preferrable to consult a Dutch contract lawyer before such (unilateral) action.
Provision in agreement to modify
Parties are, in principle, free to agree to grant a party or parties to the contract a right to unilaterally change the contract after its conclusion. If such a provision is agreed on, a party will be able to make unilateral changes, subject only to the restricting principle of reasonableness and fairness which, under Dutch law prevents a party from invoking a provision of an agreement in circumstances in which the reliance on that provision would result in an unreasonable or unjust outcome. Also on ths subject: interpretation of Dutch business contract.
Change of circumstances after the conclusion of the agreement
The second option (statutory right) flows from a legislative intervention curtailing parties the principles of freedom of contract and contracts being based on a meeting of the minds. Under article 6:258 BW, parties may, under certain circumstances, apply to the courts for a variation of the terms of contract or for orders terminating the contract. Under the terms of article 6:258(1) BW, a party may apply for variation or termination of the contract where it cannot reasonably be expected to comply with the original terms of the contract due to a change of circumstances after the conclusion of the agreement. in order for a party to invoke article 258 it must be relying on circumstances which were unforeseen at the time of conclusion of the agreement.
Unforseen circumstances for termination of contract
Any circumstances which were foreseen at the time of the conclusion of the agreement cannot be relied on to apply for court-ordered variation or termination of an agreement. Secondly, the changed circumstances must be so significant in their nature that it would be unreasonable or unjust to expect the affected party to continue performing the agreement. Finally, the article excludes any risks from the scope of this provision which, according to “common practice”, are for the party in question.
The principle of reasonableness and fairness and amendment of contract
Under Dutch law a third mechanism which can be invoked by parties seeking to avoid the operation of certain provisions in a contract after its conclusion: the principle of reasonableness and fairness which is provided for under article 6:248 BW. In the absence of a price adjustment provision or a statutory rule, it is conceivable that a party could rely on article 6:248(1) BW to imply such a provision on the basis of common practice or as a result of the requirements of reasonableness and fairness. The party invoking article 248 of the Dutch Civil Code must satisfy the court that it would be “unacceptably” unreasonable or unfair not to allow the implied provision or to allow the reliance on a specified express provision. Also check out: Dutch legal principles and business contracts.
Approach of Dutch Courts toward unilateral change of contract
The Dutch courts treat this as being a high threshold and do not exercise their discretion under article 6:248 BW lightly. This conservative and cautious exercise of the court’s discretion applies equally to article 6:258 BW (discussed above), which is largely seen as a derivative of article 6:248 BW. First and foremost, the courts must try to give effect to the words of the contract as agreed on between the parties. There is a lot of case law from Netherlands Courts on interpreatation of Dutch contracts.