Legally Binding Verdict

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The Netherlands has adopted legislation codifying the rules of certain contracts, particularly sales and consumer contracts.

Conditions

To be valid and therefore legally binding, 5 conditions must be met. The first condition there must be the mutual consent of both parties. No one can be held to a promise involuntarily made. When consent is given by error, under physical or moral duress, or as a result of fraudulent practises, the contract may be declared null and void at the request of the aggrieved party. In certain types of contractual relationship, the law demands that the consent of the party be both free and informed. This is the case, for instance, with contracts involving medical treatment.

The second condition is contractual capacity - the mental ability to keep the promise one has made. A young child, a person suffering from a serious mental disorder and sometimes even a minor are all considered incapable of contracting.

The third condition is that the contract should have an object or a purpose; it must concern a specific and agreed-upon good or service.

The fourth condition is "lawful cause" in civil law or a "valuable consideration" in common law. In this area, important technical differences exist between the 2 legal systems. Briefly, however, according to this fourth condition, the promise made must be serious and each obligation assumed by one of the parties must find a corresponding, but not necessarily equivalent or equal, promise made by the other party. A person may thus legally sell goods at a price that does not represent their actual market value. The contract would still be a valid one.

The fifth condition, which is not required in all cases, is the compliance in certain circumstances to formalities provided by law such as, for instance, a valid written instrument. In general, this condition holds for contracts that may have serious consequences for the parties, or those for which certain measures of publicity are required.

Sanctions

Parties to a valid contract are always bound by law to carry out their promise. Should they fail to, the other party is free to go to court to force them to comply. At times, the court may order the defaulting party to do exactly what he has promised (specified promise). In that respect, civil law provides more readily for the forced execution of promises than common law, for which specific performance is still an exception to the rule.

Courts may also award financial compensation in the form of damages equal in value to the loss suffered and profits lost as a result of the breach of contract, but this loss and profit must be directly related to the nonfulfillment of promise (article 1611 QCC). Furthermore, courts award only damages equivalent to those benefits that the parties might reasonably have expected to receive at the time the agreement was entered into.

Increasingly, Dutch legislatures are acting to protect citizens against certain abusive commercial practices. CONSUMER LAW, in which rules and standards are imposed to suppress FRAUD, to avoid forced sales and to protect the consumer against dishonest practices, is an example of this type of action. The new provisions of the Civil Code concerning performance in good faith (article 1375 QCC) and abusive, illegible or incomprehensible clauses (article 1379 QCC) go a long way to promote fairness in contractual relationship.

Enforcement.

As a rule judgments on civil disputes are immediately enforceable. This means that the plaintiff is able to enforce and execute the judicial decision instantly, even when the defendant has asked a higher court (Court of Appeal or Supreme Court) to review the enforceable judgment entirely or partially. If the higher court after some time nullifies the enforceable judgment, the plaintiff has to undo the damage caused by the premature execution.

A judgment may order the defendant to carry out another performance than the payment of money, under the threat of the payment of a judicial financial penalty. It’s also possible that the judgment allows the plaintiff to get such a performance himself, for instance to take away the goods which the defendant had to deliver or to register the transfer deed in de public registers for registered property if the defendant still refuses to cooperate in this. Yet, always the assistance of a bailiff and, if necessary, the police is required. In exceptional situations the defendant can be forced to comply with the judgement by taking him hostage for a limited period of time.

Where the performance itself is no longer available or the judgment orders the defendant directly to pay damages, the plaintiff may seize the property of the defendant in order to sell it, through the intervention of a bailiff or notary, by way of foreclosure (public sale under execution). He then may recover his claim from the net sale proceeds.

It is fairly easy, and one might say too easy, to seize the property of a defendant even before the first legal proceedings have started. As a result of such a preserving seizure the defendant is not able to hide his property or to encumber it with limited property rights during the legal proceedings, in anticipation of a bad outcome.

Since the implementation of the European Directive on the Enforcement of Intellectual Property Rights (1 May 2007) the possibilities of enforcement and seizures in matters relating to intellectual property have increased radically. This, however, does not apply to other civil and commercial matters.

Judgments of foreign courts are not directly enforceable in the Netherlands. Nevertheless, it is quite easy to request a Dutch court to make it enforceable within the Netherlands. Furthermore, various European Regulations and Conventions offer this opportunity in an even more simple and swift procedure. The enforcement procedure itself is always exclusively governed by national rules of execution and foreclosure.

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