Reinier advises national and international companies
reinier.russell@russell.nl +31 20 301 55 55After concluding a contract, what are your options if your counterparty won’t deliver a product, delivers the product too late, delivers a wrong or defective product or does not fulfil the agreement in any other way?
If two parties conclude an agreement, they both assume that the agreement will be fulfilled and no problems will arise. However, often, one of the parties won’t deliver a product, delivers the product too late, delivers a wrong or defective product or does not fulfil the agreement in any other way. Then what?
If an agreement is not fulfilled as previously intended, under certain conditions, the agreement can be dissolved. What are these conditions?
This can be done by notifying the counterparty in writing that the agreement will be dissolved. If the dissolution is accepted, the agreement will be dissolved from then on. If the counterparty does not accept the dissolution, the court can be requested to render a decision on the dissolution.
After the dissolution, the parties have to re-establish the situation before they entered into the contract in the best possible way. All deliveries and payments have to be undone. If the buyer returns the purchase, the seller has to return the money. But what has to be returned exactly if the product cannot be returned or only be returned in deteriorated condition? Does the seller have to refund to the buyer the total purchase price?
In some cases the product cannot be returned by the buyer and an alternative compensation will have to be paid to the seller. Recently, a buyer of a motor boat intended to dissolve the agreement because the boat was defective. The court dissolved the agreement and ordered that the money had to be refunded to the buyer, but the court forgot to mention that the buyer had to return the boat. The seller requested a supplement to the decision but in the meantime the buyer had sold the boat. Returning the boat was therefore no longer possible. Ultimately, the Supreme Court decided that the buyer should have taken into account that he had to return the boat and therefore must pay alternative compensation. If this compensation is based on the value of the boat, the seller will receive less money than the amount he has to refund.
It may also be the case that returning a product is still possible but the product has been used by the buyer and was damaged or has otherwise become less valuable. This is what happened in online sale of mobile phones. Some providers offered all-inclusive mobile phone plans, without indicating the actual price of the cell phone. As this concerned an instalment purchase, the Supreme Court ordered that it was not permitted and the clients were allowed to dissolve the part of agreement that concerned the purchase of the phone. They were allowed to return the cell phone as it was at the time and got all their money back. The provider was not allowed to ask compensation for the use of the device.
Would you like to learn more about the conditions for dissolving an agreement or do you have any other questions about fulfilling contracts, please contact Russell Advocaten:
What should you bear in mind if you want to change the rent for your business premises? When are you allowed to adjust the price yourself? And in which cases do you have to go to court?
In principle, a continuing performance agreement can always be terminated, even if no arrangements have been made in this regard. But you can’t just do it. What do you need to take into account when terminating the agreement? And what if you want to deviate from the arrangements made about terminating the agreement?
On 28 June 2025, the European Accessibility Act will come into force. From that data, digital products and services must also be accessible to people with disabilities. Which companies, products and services does the Act apply to? What disabilities should you take into account? What are the consequences of not complying with the Act?
If a contract has ended, there may still be obligations you want your contract partner to fulfil, such as warranties or confidentiality. You can regulate this through survival clauses. What should you look out for when including such clauses?
The franchise agreement and the distribution agreement are very similar, but there are also important differences. What are the consequences if you conclude a franchise agreement when it is actually a distribution agreement or vice versa? How can you avoid this misunderstanding?
The shareholders’ agreement is the most important agreement entered into between shareholders and the company. What matters should you cover in this agreement?
