COMMON CORE OF EUROPEAN PRIVATE LAW – CHANGE OF
CIRCUMSTANCES
Dutch report
Mirella E.M.G. Peletier1
1.
INTRODUCTION
The Articles 6:258 and 6:260 of the (new) Dutch Civil Code of 1992 (Burgerlijk
Wetboek, BW) contain specified provisions for the issue of changed circumstances2.
Article 6:258 BW3
1. Upon the demand of one of the parties, the judge may modify the effects of a contract, or he
may set it aside in whole or in part on the basis of unforeseen circumstances which are of such a
nature that the contracting party, according to criteria of reasonableness and equity, may not
expect that the contract be maintained in an unmodified form. The modification or the setting
aside of the contract may be given retroactive force.
2. The modification or the setting aside of the contract is not pronounced to the extent that the
person invoking the circumstances should be accountable for them according to the nature of the
contract or common opinion.
3. For the purposes of this article, a person to whom a contractual right or obligation has been
transferred, is assimilated to a contracting party.
Article 6:260 BW
1. The judge may pronounce a modification of the contract or set it aside, as referred to in articles
258 and 259, subject to conditions to be determined by him.
2. If, pursuant to these articles, the judge modifies, or partially sets the contract aside, he may
determine that one or more of the contracting parties may totally set aside the contract by a written
declaration within a period specified in the decision. The modification or partial setting aside of
the contract does not take effect before this period has expired.
3. Where the contract which is modified, or wholly or partially set aside pursuant to articles 258
and 259, is entered in the public registers, the decision modifying or setting aside the contract can
also be registered, provided that it has become final or is provisionally enforceable.
1
Research Office, Supreme Court of the Netherlands, The Hague.
The development of the Dutch law on changed circumstances is described in the German language by Piet
Abas, Rebus sic stantibus (1993), p. 263-282. See also: Arthur S. Hartkamp/Marianne M.M. Tillema,
Contract Law in the Netherlands (1995), p. 120-126. A comparison between Dutch law and Article 6:111
of the Principles of European Contract Law can be found in: Danny Busch/Ewoud Hondius/Hugo Van
Kooten/Harriët Schelhaas/Wendy Schrama (eds.), The Principles of European Contract Law and Dutch
Law. A Commentary (2002), p. 285-289 (Busch).
3
See the translation by P.P.C. Haanappel and Ejan Mackaay in: New Netherlands Civil Code, Patrimonial
law (property, obligations and special contracts) / Nouveau Code Civil Néerlandais, le droit patrimonial
(les biens, les obligations et les contracts particuliers) (1990). With regard to Article 6:258 (especially its
second paragraph), I prefer this translation to the more recent translation by Peter Haanappel/Ejan
Mackaay/Hans Warendorf/Richard Thomas in Netherlands Business Legislation (loose-leaf). For
systematical reasons, the first translation is also used to quote other legal provisions in this report, except
for Article 6:212 BW. See in this context: Hugo J. van Kooten, ‘Change of Position or Wegfall der
Bereicherung in Dutch Law’, European Review of Private Law (2006), p. 464, footnote 11, who points out
that the first translation is inadequate with respect to the second paragraph of Article 6:212.
2
4. Where in this respect a person is summoned at the domicile which he has elected according to
article 252 paragraph 2, first sentence, all his successors who have not made a new registration
have thereby also been summoned. Article 29 paragraph 2 and paragraph 3, second-fifth sentence
of Book 3 apply mutatis mutandis.
5. Other juridical facts which modify or terminate a registered contract may also be registered to
the extent that judicial decisions are concerned, provided that they have become final or are
provisionally enforceable.
According to Article 6:258, the court may modify the contract or set it aside on the basis
of unforeseen circumstances, which are of such a nature that the contracting party,
according to criteria of reasonableness and equity, may not expect that the contract will
be maintained in an unmodified form. The Dutch Supreme Court (Hoge Raad) applied
this rule a pretty long time before 1992 as a sound consequence of the ever widening
scope of the principle of good faith4. Article 6:258 is considered to be a lex specialis of
the general good faith clause, codified in Article 6:248 BW5,6.
Article 6:248 BW
1. A contract has not only the juridical effects agreed to by both of the parties, but also those
which, according to the nature of the contract, result from the law, usage or the requirements of
reasonableness and equity.
2. A rule binding upon the parties as a result of the contract does not apply to the extent that, in the
given circumstances, this would be unacceptable according to criteria of reasonableness and
equity.
Article 6:258 offers a provision for situations in which the concept of impossibility
(overmacht, Article 6:74 and Article 6:75 BW) and the concept of misrepresentation or
mistake (dwaling, Article 6:228 BW) can’t give (enough) relief, for instance because
performance, after having been impossible, has become possible again but nevertheless
more or less onerous for the debtor, or because the circumstances which are invoked
didn’t play a role at all in the parties’ considerations at the time they entered into the
contract7.
Article 6:74 BW (non-performance)
1. Every failure in the performance of an obligation obliges the debtor to repair the damage which
the creditor suffers therefrom, unless the failure cannot be imputed to the debtor.
2. To the extent that performance is not already permanently impossible, section 1 only applies
subject to the provisions of § 2, respecting the default of the debtor.
Article 6:75 BW (impossibility)
A failure in the performance cannot be imputed to the debtor if it does not result from his fault and
4
HR 16 December 1977, NJ 1978, 156; HR 27 April 1984, NJ 1984, 679; HR 12 June 1987, NJ 1988, 150;
HR 21 October 1988, NJ 1990, 439; HR 23 June 1989, NJ 1991, 673; HR 10 July 1989, NJ 1989, 786.
5
The clause is formulated in the specific context of contract law; a similar clause for obligations in general
can be found in Article 6:2 BW.
6
The term lex specialis refers to the fact that the special juridical effects of Article 6:258 can’t be attained
by application of the general good faith clause in Article 6:248. See: A.S. Hartkamp, C. Asser’s
Handleiding tot de beoefening van het Nederlands Burgerlijk Recht, Verbintenissenrecht, Algemene leer
der overeenkomsten (2005), n. 341a with references and Jac. Hijma/C.C. van Dam/ W.A.M. van
Schendel/W.L. Valk, Rechtshandeling en Overeenkomst, Studiereeks Burgerlijk Recht (2004), n. 295. See
also: HR 25 June 1999, NJ 1999, 602.
7
Thus, “unforeseen” in Article 6:258 refers to future circumstances. See: HR 20 February 1998, NJ 1998,
493 and HR 24 December 2004, RvdW 2005, 9.
if he cannot be held accountable for it by law, juridical act or common opinion either.
Article 6:228 BW (mistake/misrepresentation)
1. A contract which has been entered into under the influence of error and which would not have
been entered into had there been a correct assessment of the facts, can be annulled:
a. if the error is imputable to information given by the other party, unless the other party could
assume that the contract would have been entered into even without this information;
b. if the other party, in view of what he knew or ought to know regarding the error, should have
informed the party in error;
c. if the other party in entering into the contract has based himself on the same incorrect
assumption as the party in error, unless the other party, even if there had been a correct assessment
of the facts, would not have had to understand that the party in error would therefore be prevented
from entering into the contract.
2. The annulment cannot be based on an error as to an exclusively future fact or an error for
which, given the nature of the contract, common opinion or the circumstances of the case, the
party in error should remain accountable.
Of course, the distinct concepts have much ground in common too, especially when the
effects of the remedies are considered8.
See in this context Article 6:230 BW, which contains a provision for modification in case of
mistake/misrepresentation:
1. The power to annul a contract on the basis of articles 228 and 229 lapses when the other party
timely proposes a modification to the effects of the contract which adequately removes the
prejudice which the person entitled to the annulment suffers by the continuance of the contract.
2. Furthermore, instead of pronouncing the annulment the judge may, upon the demand of one of
the parties, modify the effects of the contract to remove this prejudice.
The new code equips the judge with relatively wide powers. The judge may attach to his
decision certain conditions, such as the payment of an amount of money (see Article
6:260, paragraph 1), and he may modify or dissolve the contract with retroactive force
(Article 6:258, paragraph 1)9. Dutch law does not acknowledge the subsidiarity principle
with respect to the distinct remedies of Article 6:25810. And in general, the way a contract
may be modified is part of the judge’s discretionary powers11. Nevertheless, the legislator
regarded the possibility to adapt the contract or the setting aside of it as an exceptional
remedy which should be applied with restraint12. This basic assumption has been adopted
8
According to an established pattern, the law provides for the possibility of termination as well as for less
drastic remedies, such as partial termination or modification of the contractual effects. See on this aspect:
A. Hammerstein and J.B.M. Vranken, Beëindigen en wijzigen van overeenkomsten, Monografieën NBW A10 (1998).
9
Use of the instrument of retroactive force is part of the judge’s discretionary powers. That follows from
HR 11 July 2003, NJ 2004, 616.
10
However, the significance of the proportionality principle has been emphasized by M.E.M.G. Peletier,
Rechterlijke vrijheid en partij-autonomie , (Ph.D. VU Amsterdam) (1999), p. 129-135 and Hijma/Van
Dam/Van Schendel/Valk, op.cit., n. 292.
11
That follows from HR 18 January 2002, NJ 2002, 106.
12
See Parlementaire Geschiedenis van het nieuwe Burgerlijk Wetboek, Boek 6, Algemeen gedeelte van het
verbintenissenrecht, edited by C.J. van Zeben, J.W. Du Pon and M.M. Olthof (1981), p. 974.
by the Dutch Supreme Court13.
The plea for cautious application manifests itself in the requirements of Article 6:258 and
Article 6:260. In the first place, the court can only intervene as far as one of the
contracting parties has requested to do so (Article 6:258, paragraph 1). So termination or
modification by means of judicial interpretation of the contract is out of order. Secondly,
a change of circumstances is only relevant if it was unforeseen for both of the parties
(Article 6:258, paragraph 1). That is to say that the change of circumstances may not
have become part of the parties’ assessment of risks. In this respect the interpretation of
the contract should be decisive14. In the third place, the party who invoked the change of
circumstances may not be accountable for them according to the nature of the contract15
or the so called common opinion (Article 6:258, paragraph 2). This criterion must be
taken as a specification of the more general condition that, given the unforeseen
circumstances, the other party may not expect that the contract will be maintained in an
unmodified form (Article 6:258, paragraph1). Within this scope it must be said that the
more a party is considered to be a professional party, the sooner a change of
circumstances is considered to be at her own risk. Fourthly, if the court means that
adaptation of the contract is indicated, the court can determine that one of the parties may
totally set the contract aside within a specific period (Article 6:260, paragraph 2).
As a matter of fact, these criteria seem to have a certain deterrent effect. In the fourteen
years which passed after the enactment of the new Civil Code, the Dutch courts didn’t
apply the Articles 6:258 and 6:260 very often. For that reason, the following
questionnaire could not always be answered on the basis of (“regular”) case law. In that
case, interpretations in Dutch legal doctrine and arbitral decisions have been taken into
account.
Article 6:258 does not deal with the issue of renegotiation. However, keeping the
example of the so called “hardship clauses” in international commercial contracts in
mind, Dutch legal doctrine assumes that in certain cases the parties will have a duty to
renegotiate, even if they didn’t provide for that explicitly. Such an obligation can be
based on the general good faith clause of Article 6:248 and the judge who has to decide
on a request based on Article 6:258 may take the non-performance of that obligation into
account16.
Finally, it must be noted that Article 6:258 contains a general provision for the problem
of changed circumstances. More specific provisions can be found in family law (Article
HR 20 February 1998, NJ 1998, 493. See also Hof ’s-Gravenhage 16 April 2004, Prg. 2004, 6263 and
Hof ‘s-Hertogenbosch 12 October 2004, NJF 2005, 305.
14
See for instance: Pres. Rb.‘s-Gravenhage 17 December 1999, Prg. 2000, 5415 and Ktr. Dordrecht 26
January 2006, Prg. 2006, 44.
15
See: HR 28 November 1980, NJ 1981, 440 (optional right); HR 15 November 1985, NJ 1986, 228
(settlement) and HR 26 March 2004, NJ 2004, 309 (performance bond).
16
See for instance: A.S. Hartkamp (2005), op. cit., ns. 332 (conclusion) and 334; Peletier, op. cit., p. 146151; R.P.J.L. Tjittes, De eenzijdige wijziging van een contract, in: Mok-aria; opstellen aangeboden aan
Prof. Mr. M.R. Mok ter gelegenheid van zijn 70ste verjaardag (2002), p. 370-371. See for a different view:
W.L. Valk, NTBR 2002, p. 149.
13
1:159, paragraph 3 BW), property law (Article 3:168, paragraph 3 BW, Article 5:78 BW
and Article 5:97 BW), contract law (art. 6:259 BW) and special contract law (Article
7:753 BW, concerning building contracts).
2.
CASES; EQUIVALENCE OF EXCHANGE IS DISTORTED
2.1.
Case 1 and 2 : inflation
Case 1 (regular inflation)
Early in the 20th century, the farmers A and B enter into a contract under which A
promises to build and maintain an irrigation canal; B is entitled to draw off water at a
fixed price. The contract is concluded for an unlimited period of time. Almost 100 years
later, A’s successors ask for an increase in the price arguing that due to inflation and a
rise in the costs of maintenance as well as the labour, the agreed price has become
completely inadequate.
Is the claim of A’s successors justified? Are they, alternatively, entitled to terminate the
contract?
Case 2 (extraordinary inflation)
A receives a loan from the B-Bank. Under the agreement the interest-rate is fixed at 10
percent for five years. In the last 20 years before the agreement, the rate of inflation had
been relatively stable within a range of one to six percent. In the third year after the
conclusion of the agreement the economic situation begins to destabilize and inflation
rises quickly to 50 percent.
B-Bank asks for renegotiation and adjustment of the contract.
(Variation) The loan agreement between A and the B-Bank provides for repayment and
interest in a foreign currency. In the last 10 years before the agreement, the relevant
exchange rate had been relatively stable within a range of 20 percent. Subsequently, the
national currency devaluates by 80 percent as compared to the foreign currency.
A asks for renegotiation and adjustment of the contract.
General remarks
Like many other European law systems, Dutch private law supports the nominal value
principle. This principle constitutes an obstacle to adapt a contract on the basis of regular
inflation. The creditor ought to bear the risk of depreciation; an appreciation is
accountable to the debtor17. Does the same rule apply to cases of exceptional inflation? In
Dutch legal doctrine, this question is mostly answered in the negative. Those who adhere
to a general application of the nominal value principle, state that it will be contrary to the
17
See Article 6:111 BW. See also: Hartkamp (2005), op. cit., n. 338 with references and W.L.Valk in:
Losbladige uitgave, bevattende rechtspraak en literatuur over het Verbintenissenrecht, (loose-leaf), edited
by C.J.H. Brunner and E.H. Hondius, Article 6:258, ns. 18 and 35.2.
criteria of reasonableness and equity, if the judge would adapt a contract in random
occurrences, where many others will be affected by the same exceptional inflation, too18.
On the other hand, according to the drafters’ comment to the new Civil Code, the
legislator seems to be in favour of the view that in exceptional cases19, especially those in
which regular inflation affects a long term contract, Article 6:258 may be applied. With
reference to German jurisprudence on devaluated pensions, the legislator holds a
depreciation of 40% sufficient for judicial intervention on the basis of Article 6:258. The
underlying idea is that it would be unreasonable if a disproportionately inflationary
advantage simply falls into the lap of one of the contracting parties. Therefore, the
disturbed contractual equilibrium must be restored20.
Under the regime of the new Civil Code the Dutch Supreme Court hasn’t had the
opportunity yet to speak out on the matter 21. Anyway, in reverse cases with respect to the
influence of appreciation of immovable property on marriage settlements, the Dutch
Supreme Court disregarded the nominal value principle on the basis of unforeseen
circumstances22.
Remarks on case 1
In the first place, the fact that A’s successors claim an adaptation of the price is
irrelevant. Article 6:258 can also be applied on request of the person who acquired the
rights of an initial contracting party (Article 6:258, paragraph 3). Assuming that the
contracting parties did not provide for the effects of (long term) inflation23, the change of
circumstances can be qualified as ‘unforeseen’ within the meaning of Article 6:258 (1).
After all, the contract does not allocate the risk of inflation neither to A nor to B.
Furthermore, this unforeseen effect of (long term) inflation must be of such a nature that
B - according to criteria of reasonableness and equity - may not expect the contract to be
maintained in an unmodified form (Article 6:258, paragraph 1). As stated before, this
won’t be the case if the person who invokes the change of circumstances is accountable
for them according to the nature of the contract or the so called common opinion (Article
6:258, paragraph 2). Considering the foregoing general remarks on the legislator’s
opinion on adaptation in case of regular inflation affecting long term contracts, it seems
to me that under Dutch law A’s successors may request modification of the effects of the
contract (the price B is due to pay or the opposite duty of A) on the basis of Article
6:25824.
18
Ibidem.
See Parlementaire Geschiedenis, op. cit. in footnote 12, p. 972 and 975. See also: Hartkamp (2005),
op.cit., n. 338 (conclusion) and Verbintenissenrecht (Valk), op. cit. in footnote 17, Article 6:258, n. 18.
20
Parlementaire Geschiedenis, op. cit., p. 977, n. 5.
21
Under the regime of the previous Civil Code, the Dutch Supreme Court stood for strict observance of the
nominal value principle. See for instance: HR 2 January 1931, NJ 1931, p. 274.
22
HR 12 June 1987, NJ 1988, 150; Hof ’s-Gravenhage 4 November 1988, NJ 1989, 540; HR 30 January
1991, NJ 1992, 191; HR 15 September 1995, NJ 1996, 616. See also: HR 10 January 1992, NJ 1992, 651.
23
(International) commercial contracts often contain clauses on price fluctuation. See: Arbitrage
Nederlandse Expeditie-voorwaarden te Rotterdam (arbitral decision), 2 July 1969, TvA 1969, 168.
24
A comparable case can be found in the arbitral decision of 25 July 1959, TvA 1959, p. 313-315. In that
case adaptation of a long term (40 years) contract concerning the supply of tap water on payment of a fixed
price was denied. However, the decision must be considered against the background of the era: in those
days the good faith principle played a (very) modest part in the Dutch Supreme Court jurisprudence on
contract law. See § 1 and the references mentioned in footnote 4.
19
Remarks on case 2
As stated before, most scholars consider extraordinary inflation as a matter the legislator
should be concerned about. Without such special legislation, judicial adaptation of the
contract seems to be out of order, notwithstanding the nature of that extraordinary
inflation (whether or not affecting the local/foreign currency25). Therefore, modification
of the contract will be allowed provided A as well as the B-Bank will consent to such a
modification.
2.2.
Case 3: governmental intervention
A and B enter into a contract under which A promises to supply 120,000 litres of
industrial spirit to B. Subsequently, a statute is enacted by which an alcohol tax is
imposed on the sale of industrial spirit. The tax statute provides that the seller has to pay
the tax. The tax is so high that it even exceeds the price that A and B have agreed upon.
Is A entitled to recover compensation for the additional costs or to cancel the contract?
Remarks on case 3
In 1996 the Dutch Supreme Court confirmed that an amendment of the law can be
considered as a relevant change of circumstances within the meaning of Article 6:25826.
The case was about new provisions in rent law, but similar solutions are achieved by the
lower courts in the range of tax law27. Against the background of this jurisprudence,
adaptation or termination of the contract is within the bounds of possibility. However,
generally, the Dutch tax authorities tend to inform the public about new tax law amply in
advance. In that case, the posing that the new tax statute is a change of circumstances,
accountable to A on the basis of Article 6:258, paragraph 2, is debatable as well (as a
professional party, A could have been well informed about future tax law and, with a
view to that, could have made arrangements in the contract with B). If it comes to that, A
won’t be entitled to ask for modification or termination of the contract.
2.3
Case 4: unexpected benefit
B leases business premises from A for a fixed period of 15 years. Shortly after conclusion
of the contract, the character of the area changes strongly and unexpectedly: a military
airport located nearby is shut down and an enormous amount of public funds is invested
in the area (infrastructure etc.). As a consequence, B´s business soars and his profits are
500% of what he could reasonably have expected. By the same token, the rental value of
comparable business premises in the same area rises to 500% of the amount A and B
have agreed upon. A claims that the leasing price is to be adjusted accordingly or,
alternatively, that the agreement is to be terminated.
Remarks on case 4
25
See: Hartkamp (2005), op. cit., n. 338, p. 354.
HR 14 June 1996, NJ 1996, 729.
27
Pres. Rb. Arnhem, 19 June 1987, KG 1987, 278.
26
If the rent of business accomodation doesn’t correspond to the rent of comparable
business accomodation in the same area, Dutch rent law contains special provisions for
judicial price adaptation (see Articles 7:303-305 BW). If, as in case 4, the parties agreed
on lease for a specified period of time, adaptation is only possible when that period of
time has expired (Art. 7:303, 1a). With respect to this consequence the question arises
whether there is still room for application of Article 6:258 or the general good faith
clause of Article 6:248 BW. The question must be answered in the negative, with room
for exceptions in case of exceptional unreasonableness28.
3.
CASES; RECIPIENTS USE OF CONTRACTUAL GOODS OR SERVICES
IS SUBSTANTIALLY AFFECTED
3.1.
General remarks
According to the drafters’ comment to the new Civil Code, the legislator takes the view
that Article 6:258 is applicable in situations where the contractual goal has been
frustrated by unforeseen circumstances29. On the other hand, legal scholars emphasize
that the circumstances which caused the frustration may be unforeseen, but nevertheless
at the risk of the disadvantaged party because of the nature of the contract or the common
opinion (Article 6:258, paragraph 2)30. Furthermore, some argue that the contracting
party must have been acquainted with the goal which is frustrated by the unforeseen
circumstances31.
From jurisprudence it comes clear that the (lower) courts are inclined to consider
frustration of a contractual goal as a risk the disadvantaged party should bear (at least
partially) on the basis of the common opinion. For instance, the circumstance of a
cancelled marriage doesn’t release the former bride from her duty to pay the wedding
dress32. A chain stores company can’t be released from her duty to a municipality to
establish a department store, because her initial goal - building a store of a certain size - is
frustrated by demographical and economic changes in the region33. Lease of business
accommodation can’t be terminated because of disappointing trading results34.
3.2.
Case 5: renovation of cellar
See: M.F.A. Evers, Huurrecht bedrijfsruimten, (2003), p. 134 and P. Abas, C. Asser’s Handleiding tot de
beoefening van het Nederlands Burgerlijk Recht, Bijzondere overeenkomsten, Huur (2004), n. 302. See
also: Rb. Haarlem 1 August 1989, NJ 1990, 821; Ktg. Groningen 2 Oktober 1991, Prg. 1993, 3956; Ktg.
’s-Gravenhage 9 December 1992, Prg. 1993, 3808.
29
Parlementaire Geschiedenis, op. cit., p. 969, 976 en 977.
30
See Verbintenissenrecht (Valk), op.cit., Article 6:258, n. 36.
31
Ibidem.
32
See: Ktg. Zaandam 18 March 1993, Prg. 1993, 3891 and Ktr. Dordrecht 7 July 2005, Prg. 2005, 186.
33
Hof Amsterdam 6 May 1982 (not published but reproduced by P. Abas, WPNR 5625 (1982), p. 623).
34
Ktg. Emmen 2 July 1997, Prg. 1998, 5014; HR 20 February 1998, NJ 1998, 493; Ktg. Emmen 8 April
1998, Prg. 1998, 5013 and Ktr. Dordrecht 26 January 2006, Prg. 2006, 44. However, see also: Ktg.
Amsterdam, 15 April 1997 and 2 September 1997, Prg. 1997, 4857.
28
A agrees to refurbish B’s cellar into a wine-cellar. The work is scheduled to start one
month after the agreement. Before the work has started, B’s house is completely
destroyed during a heavy summer storm. However the cellar of the house remains fully
intact. B immediately informs A and asks him not to perform. A insists on the agreement.
He argues that B’s cellar is still intact, that he has reserved two weeks to perform the
work an that he has already purchased the necessary materials.
Is B obliged to pay the contract price or, alternatively, to compensate A for his losses?
Remarks on case 5
In general, according to Dutch common opinion (see § 3.1) there is no basis for the
argument that A should share substantially in B’s loss. On the other hand, B seems to be
a non-professional party and won’t have the opportunity to avoid his loss outside the
scope of the contract with A, since a wine-cellar without a house is quite useless and
therefore not suitable for resale or leasing. Another relevant fact is that A, besides the
purchase of materials, has not performed yet35. Given the relatively strong protection of
consumers in Dutch private law, B most probably will be released from his duty to pay
the contract price, but not without compensating the costs A had to make to fulfill his
contractual duties towards B; see in this context Article 260 (2).
3.3.
Case 6: rented petrol station
A leases a petrol station from B. Due to outbreak of war, the government confiscates all
petrol in that area and it is impossible for A to obtain petrol from any source. As a result,
A can make no use of the petrol station. He stops the payment on the lease.
Is A’s refusal to pay the rent justified?
Remarks on case 6
In general, according to Dutch common opinion, deterioration of the lessee’s financial
situation, is qualified as a circumstance the lessee should be accountable for, apart from
exceptional cases36. As long as the impossibility to obtain petrol is only temporarily and
A’s solvency is not essentially threatened, it is most unlikely that a Dutch judge would
qualify A’s situation as such an exceptional case. Then, A’s refusal to pay the rent is not
justified.
Anyway, it must be said that in Dutch practice, the use of petrol stations will rather be
regulated by an “operating agreement” in which B - usually an oil company - will grant a
right to utilize a petrol station to A. Such an agreement has more implications than those
following from the concept of leasing and letting, since it is also characterized by aspects
of distribution, franchise and/or agency. Mostly such an agreement contains a clause with
respect to disappointing operating profits. However in that case, B generally will have the
35
Parlementaire Geschiedenis, op. cit., p. 970.
Ktg. Rotterdam 5 October 1993 and Rb. Rotterdam 23 December 1994, Prg. 1995, 4419 and 4354; Ktg.
Hoorn 14 April 1998, Prg. 1998, 4995 and Ktr. Deventer 2 May 2002, Prg. 2002, 5882. See also:
Nederlands Arbitrage Instituut (arbitral decision), 9 September 1982, TvA 1983, n. 32.
36
right to terminate the contract.
3.4.
Case 7: (variations on the) coronation case
A reserved a room at B’s hotel, but:
a) The exhibition he wants to see is cancelled at the very last moment;
b) A terrorist movement declares that it is to launch a campaign against tourists in that
town;
c) The coronation procession scheduled at the respective date is cancelled. The room has
a view to the street, on which the procession was supposed to take place. Due to the
extraordinary event, the agreed price is ten times higher than the regular price.
Is A entitled to cancel the reservation?
Remarks on case 7
This case refers to the distinction between frustration of a contractual goal, cognizable to
the contracting party on the one hand, and incognizable contractual goals, on the other.
Although case law regarding to this distinction is not available, the rule that a frustrated
goal only will be relevant if the other party is acquainted with that goal, is recognized by
Dutch legal doctrine (see § 3.1). Against the background of this distinction, A is not
entitled to cancel the reservation in case (a), whereas he can in case (c)37. Given the
extraordinary price the parties agreed on in case (c), the underlying purpose of A’s hotel
reservation must have been knowable to B. Strictly speaking, case (b) does not concern a
frustration of A’s contractual goal (visiting the hotel for unspecified reasons), but rather a
situation in which the fulfillment of the contractual obligation becomes more or less
onerous for A. Given the extraordinary nature of the supervening event, it seems
sustainable that A and B have to share the disadvantage resulting from that event, for
instance by modifying the agreed price38.
3.5.
Case 8: long term shop rental
A is the owner of a bookshop and contracts with B for the rent of business
accommodation in B’s shopping centre. The fixed period of the lease is 5 years. The
shopping centre has just been built and a large part of the accommodation is still
unoccupied. Both parties expect at the time of contracting that a variety of shops (hotel,
catering trade, retail sale) will settle down. One year later almost all accommodation is
rented, but 3/4 of the shopping centre consists of restaurants and cafes. For that reason
most potential customers visit the shopping centre after A closes the doors of the
bookshop.
37
See: Hartkamp (2005), op. cit., n. 339 with references.
In the Netherlands most travel organizations use standard terms containing a clause on annulment of the
contract in case of war, catastrophe etc. Often the risk is spread among the parties. Arbitral jurisprudence
concentrates on the applicability of such clauses. See: Geschillencommissie Reizen (binding advice), 9
January 1987, TvA 1988, n. 10 (Soviet-Union after Tsjernobyl); Geschillencomissie Reizen (binding
advice), 6 March 1990 (China after Tien An Min Square demonstrations), TvC 1990, p. 238 and
Geschillencommissie Reizen (binding advices), 16 December 1991, TvC 1992, p. 97, 102 and 105 (former
Yugoslavia during civil war).
38
Is A entitled to cancel or to renegotiate the contract?
Remarks on case 8
An important field of application of Article 6:258 can be found within the reach of rent
law39, especially where the rent of business accommodation comes into play. The
explanation for this phenomenon is that the codified law on rent is lacking a clause on
unforeseen circumstances. Because of the structure of the Dutch Civil Code, the general
clause of Article 6:258 also applies to specified contracts like lease. In cases like the
present, in which the parties’ mutual expectations with respect to the occupancy of the
shopping mall prove to be too high (and can be qualified as unforeseen within the
meaning of Article 6:258) the lower courts are inclined to modify the contract with
respect to the price as well as the term40.
3.6
Case 9: sales far below expectations
A is the landlord of a bar. He enters into an exclusive supply agreement with the beer
brewery B for a fixed period of 15 years. Pursuant to the contract, A is obliged to accept
and pay a specific quantity of beer on a monthly basis, while he is allowed to use
technical equipment and furnishings owned by B. Consumption of beer, however,
remains far below expectations. The bar is well attended but the “B-beer” is unpopular
amongst customers of A’s bar. A requests adjustment or termination of the agreement.
Is A´s claim justified?
Remarks on case 9
If the contract doesn’t contain a provision for the described problem, A most probably
can’t ask for adaptation or termination of the contract41. The proposition that A couldn’t
foresee that the B-beer would turn out to be unpopular, is debatable and it is rather likely
that this risk has to be born by A on the basis of Article 258, 2. See in this context my
general remarks in § 3.1.
39
See for instance: HR 20 April 2001, NJ 2001, 361 (adaptation of the rent) and Ktg. Amsterdam 9 January
1998, Prg. 1998, 5005 (termination because of “incompatibilité des humeurs” of the lessor and lessee). See
also: HR 20 February 1998, NJ 1998, 493 (unjustified expectations with respect to improvements of the
environment of the accommodation).
40
Ktg. Amsterdam 15 April 1997 and 2 September 1997, Prg. 1997, 4857; Ktg. Zevenbergen, 16 July 1998
and 27 August 1998, Prg. 1999, 5102. However, see also: Ktg. Emmen 2 July 1997, Prg. 1998, 5014 and,
in case of a discount in rent during the start-up phase: Ktr. Rotterdam 23 January 2003, Prg. 2003, 6011;
Ktr. Dordrecht 26 January 2006, Prg. 2006, 44.
41
Dutch courts are not inclined to adapt the duty to buy the agreed amount of beer in so called “brewery
contracts”, see HR 31 October 1986, NJ 1987, 270. Often, those contracts also have the character of loan;
see on (denied) adaptation of repayment terms in a brewery contract: Pres. Rb. Zwolle 30 September 1996,
KG 1996, 352.
3.7
Case 10: export ban
Firm A purchases technical equipment which is to be produced by firm B. The parties
know that firm A plans to resell the equipment to Iraq. At the time of contracting, exports
to Iraq are illegal but the parties expect that the status quo will change until the time of
delivery. The parties are aware that the equipment can only be sold to Iraq at a reasonable
price. When firm B has completed production and offers delivery, exports to Iraq are still
illegal and no change is in sight. Firm A refuses acceptance and payment.
Is A’s refusal of acceptance and payment justified?
Remarks on case 10
The fact that the export ban still exists can be qualified as an unforeseen circumstance
within the meaning of Article 6:25842. However, there are several reasons why A most
probably will not be released from his duty to pay. In the first place, the parties couldn’t
be sure about the future status quo of exporting to Iraq at the moment they entered into
the contract. Anyway, the contract doesn’t provide for a spreading of the risk related to
this uncertainty. So, A deliberately ran the risk that the uncertainty would turn out against
him. According to Article 6:258 (2) this disadvantage should be borne by A, because of
the risk containing nature of the contract43 (or the common opinion). Another reason for
keeping Article 6:258 out of scope is the fact that the contract is already in the final stage
of performance. Then, according to the drafters’ comment to the new Civil Code,
modification or termination on the basis of Article 6:258 won’t be reasonable44.
4.
OTHER CASES CONCERNING FRUSTRATION OF SPECIFIED
PURPOSES
4.1
Case 11: use of real estate
A sells his house to B at a price far below its market value. Both parties assume that B
would dedicate the house to cultural purposes only. However, this assumption was not
inserted into the contract as an explicit condition. B changes his mind and gives it to one
of his daughters instead.
Is A entitled to ask for the difference between the agreed price and the market value or,
alternatively, to reclaim the house?
42
Contracts on the international sale of goods often contain special clauses concerning the problem of an
unforeseen export ban. See for instance: Koninklijke Vereniging Comité van Graanhandelaren (arbitral
decision) 5 December 1997, TvA 1998, n. 43 (grain trade). See also: Koninklijke Vereniging Comité van
Graanhandelaren (arbitral decision) 2 December 1984, TvA 1985, n. 20 (grain trade; guaranteed export
permit).
43
See: Hof ‘s-Hertogenbosch 17 November 1983, BR 1984, p. 152; Rb. Amsterdam 18 October 1995, JOR
1996, 12.
44
Parlementaire Geschiedenis, op. cit., p. 970.
Remarks on case 11
According to Dutch law, this case won’t be solved on the basis of Article 6:258, but
rather on the basis of (i) Article 6:248, 1 (quoted supra, § 1), concerning the interpretation
of a contract, and (ii) the Articles 6:74 (quoted supra, § 1), 6:265 and 6:277 BW, which
determine the effects of non-performance.
Article 6:265 BW (termination in case of non-performance)
1. Every failure of one party in the performance of one of his obligations gives the other party the
right to set aside the contract in whole or in part, unless the failure, given its special nature or
minor importance, does not justify the setting aside of the contract and the consequences flowing
there from.
2. To the extent that performance is not already permanently or temporarily impossible, the right
to set the contract aside does not arise until the debtor is in default.
Article 6:277 (damages in addition to termination)
1. Where a contract is set aside in whole or in part, the party whose failure in performing the
obligation has been the cause of the setting aside, must make reparation for the damage which the
other party suffers as there is no reciprocal performance, but rather the setting aside of the
contract.
2. If the failure in the performance cannot be imputed to the debtor, the preceding paragraph only
applies within the limits of the provisions of article 78.
When establishing the duties of the parties, it isn’t the literal text of the contract which is
decisive, since the juridical effects which result from the law, usage or the requirements
of reasonableness and equity are of equal importance (Article 6:248, 1)45. Thus, if A
would take the position that the parties agreed that B would dedicate the house to cultural
purposes only, and B would refer to the absence of an explicit condition on the use of the
real estate, the low price the parties agreed on is a strong sign that A is right. Following
the line of this argument, B’s behaviour must be qualified as non-performance within the
reach of Article 6:7446 and as a result of this (i) A can claim damages (consisting of the
difference between the agreed price and the market value, see Article 6:74) or (ii)
terminate the contract (Article 6:265), resulting in an obligation for B to restitute the
house to A (Article 6:271 BW) and – if Article 6:277 applies – an obligation for B to pay
additional damages to A.
4.2
Case 12: compensation within the reach of divorce law
Before A and B get married, they enter into an ante nuptial agreement, in which they
agree on separation of property. During the marriage, A buys a house and A and B use
the house as their family home. The price for the house is € 500.000.- . A is the sole
proprietor of the house, but B has contributed € 100.000 to the purchase price. In
addition, B has done extensive renovation work before they move in. The renovation
would have cost € 50.000.-, if professional services had been employed. After A and B
have lived together in the house for one year, they separate and get divorced. Divorce law
45
The rule can be qualified as the codification of the interpretation rule the Dutch Supreme Court
formulated in the Haviltex case (HR 13 March 1981, NJ 1981, 635), which has been confirmed by the
Court in many cases afterwards. See: Hartkamp (2005), op. cit., ns. 279-288 with references and
Hijma/Van Dam/Van Schendel/Valk (2004), op. cit., ns. 265-269.
46
See in this context: HR 22 October 2004, RvdW 2004, 119.
does not provide for a basis of compensation.
Is B entitled to compensation for his contributions to the family home?
Remarks on case 12
According to Dutch jurisprudence, B can claim restitution of the nominal sum of his
investment47. This right to compensation is founded on analogous application of statutory
regulations with respect to marital community of property48. In principle, Dutch law also
offers various foundations for compensation of appreciation of the marital home, such as
unjustified enrichment (Article 6:212 BW) and the general good faith clause of Article
6:248 BW (quoted supra, § 1).
Article 6:212 BW (unjustified enrichment)49
1. A person who has been unjustly enriched at the expense of another must, to the extent this is
reasonable, repair the damage up to the amount of his enrichment.
2. An enrichment shall not be taken into consideration to the extent that it has been decreased as a
result of a circumstance not attributable to the enriched person.
3. A decrease in the enrichment during the period in which the enriched person did not reasonably
need to take into account the possibility of having to repair damage shall not be attributed to him.
In determining this decrease, expenditure which would not have been made had there been no
enrichment, is also taken into account.
However, as long as B has the use of A’s house, B’s claim on the basis of Article 6:212
or Article 6: 248 will be disputable. If the value of B’s contributions more or less equals
the value of the benefit B derived from the use of the house, B’s claim will fail anyway,
since B has not become impoverished, whereas in this respect the hypothesis that
compensation is in accordance with the standards of reasonableness and equity does not
hold either50. Nevertheless, if the appreciation of the marital home is caused by
(exceptional) unforeseen developments on the housing market, the appreciation must be
divided by the spouses51.
5.
CASES; COMMON MISTAKE
5.1.
Case 13: market value of shares
A holds shares of the X-corporation. He agrees to sell the shares to B at the current price
as listed by the stock-exchange on the day of contracting. In the written contract, the
parties set a price of € 10 per share. However, the actual price per share on the day of
contracting is € 12. The internet service, from which the parties derived the price, had
47
See for instance: HR 12 June 1987, NJ 1988, 150; HR 15 September 1995, NJ 1996, 616 and HR 19
December 2003, NJ 2004, 185. See also: J. De Boer, C. Asser’s Handleiding tot de beoefening van het
Nederlands Burgerlijk Recht, Personen- en familierecht (2002), ns. 450-455.
48
See: HR 12 June 1987, NJ 1988, 150.
49
The translation of this paragraph is by Haanappel/Mackaay/Warendorf/Thomas, op.cit.; see footnote 2.
50
See for instance: Hof Leeuwarden 27 March 2002, NJ 2002, 575.
51
HR 12 June 1987, NJ 1988, 150. See also: Hof ‘s-Gravenhage 16 May 1986, NJ 1987, 737 and HR 29
September 1995, NJ 1996, 88.
displayed an incorrect number. When A finds out about the correct price, he demands that
the purchase price is to be increased to € 12.
Can A ask for a price of € 12 ? Can he, alternatively, cancel the contract?
Remarks on case 13
According to Dutch law this case can be qualified as a case of common mistake pursuant
to Article 6:228 (1), c (quoted supra, § 1) since (i) the contract has been entered into
under the influence of error, (ii) A and B agreed explicitly on the price as listed by the
stock market on the day of contracting, so it may be assumed that A would not have
agreed if there had been a correct assessment of the facts, (iii) B based himself on the
same incorrect assumption as A, while (iv) B could understand that A would therefore be
prevented from entering into the contract, and finally (v) the error can not be qualified as
an error, for which, given the nature of the contract, common opinion or the
circumstances of the case, A should remain accountable; on the contrary, from the
explicit condition can be gathered that an error with respect to the price should not be at
risk of A alone (see Article 6:228, paragraph 2).
The effects of Article 6:228 are highly similar to the effects of Article 6:258: the party in
error may terminate (avoid) the contract (Article 6:228, paragraph 1), but the power to
terminate (avoid) lapses when the other party timely proposes a modification of the
contract which adequately removes the prejudice which the party in error suffers by
continuance of the contract (Article 6:230, paragraph 1, quoted supra in § 1).
Alternatively, both parties may demand the court to modify the effects of the contract to
remove the prejudice of the party in error (Article 6:230, paragraph 2). Because of their
similarity, the Articles 6:258 and 6:230 are often bracketed together52.
Considering the foregoing, A can avoid the contract on the basis of Article 6:228 (1), but
not if B timely proposes to modify the contract (price) on the basis of Article 6:230 (1). A
may also ask the court for modification of the price on the basis of Article 6:230 (2).
6.
MISCELLANEOUS ISSUES
6.1.
Case 14 : performance temporary impossible
A agrees to deliver some goods to B at a certain date, but:
a) the workers of a subcontractor go on strike;
b) due to problems with the state energy production and distribution system the
government decides to cut the electricity supply during night making it impossible to
work at night.
Is B entitled to cancel the contract and to ask for damages?
52
See: HR 28 November 1997, NJ 1998, 659 and HR 18 January 2002, NJ 2002, 106.
Remarks on case 14
To both cases the rules with respect to non-performance and impossibility (Artt. 6:74 and
6:75, quoted supra, § 1) apply53. In this respect, it must be said that the Dutch concept of
impossibility is interpreted subjectively. If performance is objectively or relatively not
impossible, but leads to the situation in which performance becomes (extremely) onerous
for the debtor, the debtor may invoke Article 6:75. In that respect the concept of
impossibility and the concept of unforeseen circumstances overlap54.
Nevertheless, according to the so called “common opinion” (Article 6:75 and Article
6:258, paragraph 2), a strike is a circumstance the debtor is accountable for, even when
the strike hits a subcontractor (see Article 6:76 BW, which determines that the debtor is
accountable for a fault, caused by persons he called in to perform towards the creditor)55.
So in case (a), B is entitled to cancel the contract and may ask for damages (see Artt.
6:265 and 6:277, quoted supra in § 3.7). Article 6:258 will be left outside; see Article
6:258 (2).
Since performance seems absolutely impossible in case (b), A may invoke Article 6:75,
which releases him of his obligation to deliver the goods to B. In that case, B is entitled to
terminate the contract on the basis of Article 6:265 (see § 4.1) and may ask for additional
damages (Article 6:277). Since the governmental decision on the electricity supply56 most
probably is unforeseen for both of the parties, B may also ask for termination of the
contract and damages on the basis of the Articles 6:258 and 6:260.
6.2.
Case 15 : clauses on unexpected circumstances
The construction company A agrees to build a double-floor building on B’s ground for
the price of € 2.000.000.- . In the contract the parties stipulate a disclaimer which
excludes “all the rights of both parties arising from unexpected circumstances”. Two
weeks after the construction work has begun, a granite rock, which could not have been
detected by the parties before conclusion of the contract is revealed on B’s ground.
Can A ask for renegotiation or can he cancel the contract in spite of the disclaimer?
Remarks on case 15
Just like the general good faith clause of Article 6:248, Article 6:258 has to be qualified
See: A.S. Hartkamp, C. Asser’s Handleiding tot de beoefening van het Nederlands Burgerlijk Recht,
Verbintenissenrecht, De verbintenis in het algemeen (2004), ns. 311 and 321; Hartkamp (2005), op. cit., n.
340 and Hijma/Van Dam/Van Schendel/Valk, op. cit., n. 295 on the common ground of impossibility and
unforeseen circumstances.
54
See Hartkamp (2004), op. cit., n. 321 and Hartkamp (2005), op. cit., n. 340.
55
Two examples of this common opinion can be found in: Scheidsgerecht Comité van Graanhandelaren te
Rotterdam (arbitral decision) 3 December 1964, TvA 1964, p. 321 and Netherlands Oils, Fats and Oilseeds
Trade Association (arbitral decision), 17 July 1986, TvA 1987, n. 21. International commercial contracts
often contain strike clauses; see the arbitral decision of 3 December 1964.
56
In the Netherlands, the supply of energy is liberalized since the nineties. Privatization is planned for the
near future.
53
as imperative law57. That is to say that the parties cannot exclude the application of
Article 6:258 in general. However, the parties are allowed to stipulate such exclusion
with a view to specified circumstances58. In this respect, it seems that the disclaimer in
this case has a too general formulation. So A can ask for renegotiation or alternatively,
ask the court for modification/termination within the reach of Article 6:258.
Anyway, in Dutch practice the problem of price adaptation in building contracts receives
more attention than cases like the present one (see for instance Article 7:753 BW). Often
the parties agree on a fixed price for the building and/or clauses on the effect of cost
increase. However, that doesn’t mean that the price can’t be adapted on the basis of
unforeseen circumstances. According to jurisprudence of building trade arbitration
committees, relevant circumstances in this respect are exceptional increase of the steel,
oil or gas oil price59. Most of the time, the loss is spread among the parties.
57
See Article 6:250 BW.
See: Hartkamp (2005), op. cit., n. 336 and Hijma/Van Dam/Van Schendel/Valk (2004), op. cit., n. 294.
59
Raad van Arbitrage voor de Bouwbedrijven, 8 November 1977, BR 1978, 152; Raad van Arbitrage voor
de Bouwbedrijven, 14 August 1985, BR 1986, 243; Raad van Arbitrage voor de Bouwbedrijven, 11
December 1985, BR 1986, 251; Raad van Arbitrage voor de Bouw, 13 July 2004, BR 2004, 888; Raad van
Arbitrage voor de Bouw, 9 December 2004, BR 2005, 244. See also: Raad van Arbitrage voor de
Bouwbedrijven, 25 June 1981, BR 1981, 869 (price-rise of building material transport, caused by low water
level).
58