Due to the current high energy prices and inflation, there are currently companies that would prefer to terminate their Dutch contracts with suppliers or customers. But what if the contract or the Dutch law does not offer the possibility to terminate the contract?? Is a Dutch contract then at all in the meantime terminable? In this blog post, Dutch lawyer Wouter Timmermans explains whether and how to terminate the Dutch contract in the meantime.
Termination of open-ended contracts with customers or suppliers
Unlimited contracts that do not contain a termination option can usually be terminated in the meantime.
In certain cases, however, it may be the case that the principle of good faith applies and that more detailed notice requirements are imposed. In the case:
- …a termination is only possible if there is a serious reason for it.
- In addition, it could be required that a certain notice period be observed or
- That the termination must be accompanied by an offer to pay damages.
Termination of fixed-term contracts with customers or suppliers
Fixed-term contracts that do not include a termination option generally cannot be unilaterally terminated in the interim.
An exception can only be made if:
- …unforeseen circumstances arise,
- That are not within the risk area of the terminating party itself, and
- that are so severe that the other party may not demand maintenance of the contract based on the unwritten rules of good faith.
A temporary or permanent contract?
Thus, in determining whether the contract may be terminated, and if so, under what conditions, it matters a great deal whether the contract is for a fixed term or for an indefinite term.
A fixed-term contract is usually a contract that ends automatically after a certain term (z.B. if the contract states that it will end after two years) or if a contract ends when a specific service has been rendered (e.g.B. if – as agreed – a house has been completed). An open-ended contract, on the other hand, is a contract that has been concluded for an indefinite period of time. This means that the contract is not limited in time.
This seems to be a clear distinction. But in practice there are contracts where it is not clear whether it is a permanent or a temporary contract. If a court case arises in which it must be clarified whether the contract has been validly terminated, the judge must first determine whether it is an indefinite or fixed-term contract.
Consequences of an unauthorized termination
If a contract is terminated when there is no possibility of doing so, this usually means that the contract has not been legally terminated. The existing obligations must therefore continue to be fulfilled. If the party who has given notice does not comply, they can be forced to do so by a judge – under threat of a fine.
Do you want to terminate?
If you intend to terminate your Dutch contract with a customer or supplier in the meantime, you should first seek legal advice. Thus, it can be clarified whether it is possible and if so, under which conditions.
If interim termination is not an option, you might consider whether it would be possible to have the judge modify the consequences of the commercial contract due to unforeseen circumstances.