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Termination of a contract for services: almost always possible for the client (Art. 7:408 BW), but may result in compensation to the contractor. For the contractor, possibilities are more limited — only for serious reasons. Distinction: termination for the future (possible) vs. cancellation of existing obligations (dependent). It is important for a BV client to regulate the notice period and any right of extension in the contract. Below are rules per client and potential pitfalls.
The short answer
- Client: always right of termination (Art. 7:408 paragraph 1 of the Dutch Civil Code), possibly with compensation for damages.
- Contractor: only for compelling reasons.
- Term: reasonable term, to be specified in the contract.
- In the absence of a contract: reasonableness and fairness.
- Compensation: lost profit for the contractor.
Client's right of termination
Art. 7:408 paragraph 1 of the Dutch Civil Code: the client may always terminate the contract — even without reason, even for an indefinite or fixed term. However:
- Possible obligation to pay damages.
- In the case of a fixed-term contract: contractor may be entitled to remaining remuneration.
- Reimbursement of costs already incurred.
For the client: freedom to terminate the assignment — but not without cost.
Contractor's right of termination
Art. 7:408 paragraph 2 of the Dutch Civil Code: the contractor may only terminate the contract for serious reasons — e.g.:
- Non-payment by client.
- Impossibility of execution.
- Conflict of interest.
- Serious disruption of employment relationship.
- Personal circumstances (illness, bankruptcy).
Arbitrary termination: compensation to the client.
Notice period
No fixed statutory minimum, reasonableness determines:
- Short assignment (< 3 months): no fixed term.
- Ongoing assignment (3-12 months): 2-4 weeks.
- Long-term assignment (> 1 year): 1-3 months.
- Strategic assignment (consulting, interim management): 1-3 months.
The contract may agree on a longer term — not shorter than reasonable.
Compensation upon termination
In the event of termination by the Client — the Contractor is entitled to:
- Costs already incurred: for assignment.
- Remuneration for work performed: up to the moment of termination.
- Lost profit: for the remaining period of the fixed-term contract.
- Investments that have become unsustainable: e.g. courses, software.
Amount: determine contractually in advance to provide clarity upon termination.
How to cancel?
- In writing: registered mail or email with proof of receipt.
- Content: date of cancellation, reason (may be omitted by the client), new end date.
- Respect the deadline: contractual or reasonable.
- Completion: finish ongoing work or hand it over.
- Final settlement: costs, lost profits, outstanding invoices.
Immediate termination
In the event of serious breach by the other party: immediate termination possible without notice. Conditions:
- Serious breach (non-payment, serious error).
- Not rectified after formal notice.
- No reason for the opposing party to continue.
In case of doubt: termination with notice prevents a dispute.
Practical tips
- Contract in advance: specify the notice period and consequences.
- Document: why cancelling — important in case of a dispute.
- Arrangements after termination: handover, archiving, customer contact.
- Damage mitigation:alternative assignments for the contractor.
- Confidentiality: company data after termination.
Honest recommendation
For BV clients: establish termination clauses in advance in every contract for services — term, consequences, compensation. This prevents disputes upon termination. In the event of termination: document the reason and the process. For immediate termination: ensure serious breach of contract — otherwise, compensation to the contractor. In case of doubt: consult a lawyer before termination.
For other topics: contract for services, management agreement , and agency agreement.
Frequently Asked Questions
Yes (Art. 7:408 paragraph 1 of the Dutch Civil Code) — even without cause, even for a fixed term. However, compensation to the contractor is possible for lost profits, costs already incurred, and investments that have become unsustainable.
Only for weighty reasons (Art. 7:408 paragraph 2 of the Dutch Civil Code): non-payment, impossibility of performance, conflict of interest, serious disruption of the employment relationship, personal circumstances. Arbitrary termination: compensation to the Client.
No fixed minimum under law; reasonableness is the deciding factor. Short-term assignment: no fixed term. Ongoing (3-12 months): 2-4 weeks. Long-term (> 1 year): 1-3 months. The contract may agree on a longer term.
Costs already incurred, compensation for work performed, lost profits for the remaining fixed-term period, investments that have become unsustainable. Amount: to be determined contractually in advance for clarity.
In writing (registered mail or email with proof of receipt). Date of cancellation, any reason, new end date, and respect the notice period. Agree on the completion of ongoing work and the final settlement.
In the event of serious breach by the counterparty: immediate termination possible without notice. Conditions: serious breach, not remedied after formal notice, no reason for the counterparty to continue. In case of doubt: observe the notice period.
Notice period, consequences (costs, lost profits, intellectual property), procedure (written, registered), final settlement, confidentiality after termination, transfer of ongoing work. Arranging this in advance prevents disputes afterwards.
