Dutch law: general terms and conditions in international contracts

Dutch law contains a number of regulations on the applicability of general terms and conditions General terms applicable on all contracts of a corporate business.
» Meer over general terms and conditions general terms and conditions and how the user of these terms and conditions should inform his client, usually referred to as “the other party”, of the substance of these conditions. Dutch contract lawyer Thomas van Vugt from Amsterdam law firm AMS explains.

General terms and conditions under Dutch law

In principle, general terms and conditions apply directly in The Netherlands if this has been agreed upon. Whether the other party knew of or could have known of the conditions is essentially irrelevant. The Dutch Civil Code, however, does include provisions protecting the other party, both with regard to the substance of the conditions and how he should take note of the conditions. For example, the law provides that a general terms and conditions clause is voidable if the user has not offered the other party reasonable opportunity to take note of the general terms and conditions, for example by handing over these terms and conditions with the contract or, if that is not an option, by referring the client to a clearly marked Internet location.

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Nevertheless, in many cases legal entities may rely on these protective provisions only to limited extent and sometimes not at all. All of these regulations simply mean that, in The Netherlands it often comes down to the question of whether or not a general terms and conditions clause is voidable based on one of these provisions; this is the subject of many lawsuits.

General terms and conditions in international contracts

In principle, however, these specific regulations do not apply to contracts between parties who operate a business or practise a profession and of whom one or both do not have their corporate seat in The Netherlands. The question in international commercial contracts then, is how to determine whether agreement was reached that the terms and conditions will apply to the contract, and whether the other party was reasonably able to take note of the substance thereof.

General terms and conditions applicable under Dutch law?

On 11 May 2011, the Dutch Supreme Court ruled in an international commercial matter. The central issue in this case was whether or not a Dutch vendor of old military vehicles could invoke an exemption clause in the general terms and conditions used by the English purchaser, the other party, in which the vendor excluded all liability. Under Dutch law this clause in itself is valid, but the question was whether it had been agreed that the general terms and conditions which included this clause were applicable to the contract, and whether or not these were voidable (because of the way they had been declared applicable). The District Court and the Court of Appeal both found that the terms and conditions did not apply because the other party had not had reasonable opportunity to take note of its contents. The Court of Appeal clearly based its opinion on the aforementioned regulations in respect of how the other party should be informed of these conditions.

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The Dutch Supreme Court reversed the Court of Appeal’s judgment and referred the case back to the Appeal Court. After referral, it must still be examined whether applicability of the general terms and conditions was agreed. Since the specific protection regulations under Dutch law do not apply, this obviously must be assessed under general contract law. It is quite conceivable that in assessing the question of applicability of the general terms and conditions, the provisions of Section 6.5.3, will be consulted so that the question of whether the other party had reasonable opportunity to take note of the general terms and conditions is indeed relevant. Consequently, the vendor’s victory at the Dutch Supreme Court could end up being a Pyrrhic victory.