18 August 2014

Interpretation of Dutch business contract

Dutch business lawyer on Dutch contract and legal principles in the Netherlands

A written contract in the Netherlands may not be limited to the the content of the agreement. A Dutch court may draw from several sources when determining the contractual relationship of the parties to an existing written agreement. In the pre-contractual stages of a contract under Dutch law parties have to take account each other’s justifiable interests. Therefore, the negotiation process is actually of an obligatory nature. A Dutch court will assess an agreement in light of the expectations that the involved parties may have had when entering into the agreement.

Pre-contractual good faith; risk to stop negotiations

In determining the scope of an existing written contract, a Dutch court may assess whether the pre-contractual good faith principle was breached. By doing so it may find that the principle was breached by a party to the subsequent agreement. Another consequence of this pre-contractual approach is that the parties may not be at liberty to break off negotiations lightheartedly. In proceedings the break-up party may be bound to continue the contract negotiations if the principle foundations of the agreement are deemed to be present.

Principles of reasonableness and fairness in Dutch contract

An existing contract may be altered and interpreted by a Dutch court on the basis reasonableness and fairness principle. The parties to an agreement can not disengage the effects of this overriding principle. A possible cause to alter the contract may be a change in circumstances. The judicial authority to change existing agreements is of a discretionary nature and any variations may be ordered to take effect retrospectively. A change may also include the (partial) rescission of an existing contract.

Alteration of existing business contract in the Netherlands

A contract in the Netherlands may be altered if one of the parties can sufficiently proof that the occurrence of certain conditions was unforeseeable. And if as a result of such occurrences, the unimpaired subsistence of the contract would lead to an unfair and/or unreasonable result. The effects of the change may be contrary to what the parties originally agreed in the contract. As a result, Dutch contracts can be shrouded in a blanket of uncertainty as they are capable of being altered by the Dutch courts at a future date. Don’t hesitate to ask Dutch business lawyer Mark van Weeren for legal advice on Dutch Contracts.