New demands when negotiations are almost completed

The Hermitage Amsterdam museum negotiates with the operator of the museum restaurant on alteration of the opening hours but negotiations fail at the last moment. Is the museum allowed to hold the restaurant to the original agreement?

Negotiations between the Hermitage museum and the Hermitage café

In 2004, the Hermitage museum concluded a co-operation agreement with the Hermitage Café regarding the running of the catering in the museum, including the Neva restaurant. For this, Hermitage café has to pay an annual depreciation amount of EUR 150,000, plus 8% of the turnover exceeding EUR 2,375,000.

It turns out that the restaurant attracts few costumers outside the openings hours of the museum and therefore Hermitage Café wishes to alter the opening hours (no longer till 1:00 AM). The café negotiates new opening hours and the expected turnover with the museum. Parties agree on the following issues: The restaurant will be open for groups and sponsors at nights, the depreciation amount will be raised to EUR 175,000 annually and beyond a turnover of EUR 1,600,000 the Café has to pay a compensation of 6% of the turnover. So far, the parties had agreed.

Negotiations came to a halt at the last moment because of a new demand by the museum: an additional compensation of 20% of the turnover in the evening hours. The museum then held the Hermitage café to the original agreement but the Neva restaurant still closes its doors at night.

Termination of agreement and claim for damages

Subsequently, the museum claims termination of the agreement, clearing of the catering sections, and ordering the Hermitage Café to pay damages. In an interim relief procedure it was ordered in favour of the museum and the Hermitage café has to clear the café-restaurant premises. On appeal, the court sets aside the decision of the subdistrict court and holds the museum liable for damages suffered by the Hermitage café because of lost sales and costs caused by the clearing. The museum lodges a cassation appeal. The Supreme Court rendered a decision in this case on 6 October 2017.

Consequences of breaking off of negotiations

The question is whether it is reasonable in the circumstances that the museum holds the café to the original agreement where the café has to be open at night. It was clear to both parties that a structural evening opening of the café-restaurant was not profitable. After all, the turnover threshold was to be lowered. Therefore, the museum could not have reasonably expected the Hermitage Café to comply with the new condition. The Supreme Court does not consider it reasonable for the museum to hold the Hermitage Café to the original agreement in such an advanced stage of the negotiations. Parties, for instance, should have engaged a mediator.

Conclusion

Anyone who undermines negotiations at the last moment by imposing new, unreasonable demands cannot invoke legal proceedings for non-fulfilment of obligations arising from the original agreement. Are you stuck in negotiations? We will gladly help you and determine your position. Please contact us: