Changing the agreed price? Avoid being classified as an undue payment!

Do you wish to change a previously agreed price, for example by increasing the rental or purchase price? Always record this change in writing and have all parties sign it. If you fail to do so, the paying party may later claim to have overpaid and reclaim the excess as an undue payment. A signed addendum or a new agreement prevents this risk and the associated problems of proof.

What is an undue payment?

An undue payment is a payment for which there is no legal basis: it is not based on a valid agreement or an obligation to pay damages. Consequently, the payer was not actually required to pay (or not that much). The concept is regulated in Article 6:203 of the Dutch Civil Code. In principle, the recipient of such a payment must repay the amount received.

Typical examples of an undue payment are:

• a payment to the wrong account number;
• an accidentally overpaid amount;
• a payment pursuant to an agreement that is later annulled or dissolved;
• a price increase that was never validly agreed upon.

The core issue is always the same: money was indeed transferred, but there was no valid legal basis for (part of) that payment. In principle, this gives the payer the right to reclaim the amount.

What happens upon receipt of an undue payment?

Whoever receives an undue payment must repay the sum to the payer. However, the claim for repayment does not become time-barred indefinitely. Article 3:309 of the Dutch Civil Code stipulates that a claim arising from an undue payment becomes time-barred after the lapse of five years.

That short limitation period of five years begins to run on the day after the creditor is aware of both the existence of his claim and the identity of the recipient, and is also actually able to institute the claim. In addition, an absolute limitation period applies: in any case, the claim lapses twenty years after it arose. Due to this second limit, a matter cannot remain dormant indefinitely.

With periodic payments, such as monthly rent installments, it is wise to realize that, in principle, a separate claim may arise for each payment, each with its own statute of limitations. When exactly a claim becomes time-barred depends heavily on the facts; if in doubt, have this assessed before taking action or, conversely, waiting.

When can a price change become an undue payment?

The risk arises primarily when an already agreed price is adjusted without this being properly put in writing. For example, if you increase the rent or purchase price but the other party does not sign anything, that party may later claim that the higher price was never agreed upon. According to them, the difference between the old and the new price was then paid unduly and must be refunded.

Oral agreements are valid in themselves. The problem lies in the law of evidence: without a signature or written confirmation, it is difficult to prove that both parties agreed to the new price. This quickly becomes a problem, especially with price changes.

Practical example: paid a higher rent for three years

This is exactly what happened in a case that reached the Court of Appeal. A tenant had paid a higher rent for three years, even though he had never signed the draft lease agreement. He disagreed with several conditions, including those regarding the security deposit. Nevertheless, the landlord sent invoices for the increased rent, and the tenant paid them each time without protest.

When the renting company went bankrupt, the bankruptcy trustee argued that it concerned an undue payment: after all, a new lease agreement had never been concluded, so the old (lower) rent still applied. The Court of Appeal did not follow that reasoning. Because the tenant had paid the higher rent without protest for three years, the landlord was entitled to rely on the fact that the tenant agreed to the higher price. Therefore, there was no question of an undue payment.

Note: this worked out well for the landlord, but the outcome depended heavily on the facts. In a purchase agreement, where no tacit payment pattern arises over the years, or in situations where even a draft or written correspondence is completely missing, the recipient of the payment is in a significantly weaker legal position.

What concrete risks do you face as an entrepreneur?

A price change that is not properly recorded can affect you as an entrepreneur in various ways:

• Repayment: the counterparty reclaims the difference between the old and new price, sometimes over a long period.
• Burden of proof: you must demonstrate that the new price was agreed upon, and without a signature, that is difficult.
• Liquidity: an unexpected repayment obligation can result in significant costs and impact your cash flow.
• Strained relationship: a price dispute puts the business relationship with the customer, supplier, or tenant under pressure.

Always record changing agreements in writing

The core is simple: if you make changes to an existing agreement, put it in writing and have all parties sign it. This not only prevents disputes regarding unjust enrichment but also broader evidentiary problems should a disagreement arise later.

How best to do that depends on the scope of the change:

• Minor adjustments: usually, an addendum to the existing agreement suffices. In it, you include the extensions, changes, deletions, and additions, with a reference to the relevant articles. All parties sign the addendum, and it is added to the agreement.
• Significant or numerous changes: if crucial adjustments, many changes, or if multiple addenda already exist, an entirely new agreement is often clearer and legally stronger.

In the event of a price change, it is advisable to explicitly record what the new price is, from which date it applies, and that both parties agree to it. Unsure how best to phrase this? Then have a purchase agreement or lease agreement for commercial property properly drafted or reviewed to ensure the agreements are watertight.

Step-by-step plan: securely record a price change

1. Determine whether it concerns a minor adjustment (addendum) or a substantial change (new agreement).
2. Concretely record the new price, the effective date, and the agreement of both parties.
3. Refer to the existing agreement and the amended articles in an addendum.
4. Have the document signed by all parties before the new price takes effect.
5. Keep the signed document with the original agreement.

Frequently asked questions about price changes and undue payment

What is an undue payment in brief?

A payment for which there is no valid legal basis, regulated in Article 6:203 of the Dutch Civil Code. In principle, the recipient must repay the amount to the payer.

How long do you have to reclaim an undue payment?

The short limitation period is five years (Article 3:309 of the Dutch Civil Code) and begins to run as soon as the creditor becomes aware of the claim and the receiver can institute the claim. In addition, an absolute period of twenty years applies after the claim arises.

Am I allowed to simply increase an agreed price?

Not unilaterally without basis. A price change requires the consent of both parties. Record that consent in writing; otherwise, the other party may argue that the additional amount was paid unduly.

Is a verbal price agreement valid?

Yes, verbal agreements are valid in principle. The problem is the proof: without a signature or written confirmation, it is difficult to prove that the new price was agreed upon.

Is an addendum sufficient, or do I need to draw up a new agreement?

For minor adjustments, a signed addendum usually suffices. For substantial or numerous changes, or if there are already multiple addenda, a new agreement is usually more sensible.

What if the other party pays the higher price for years without protest?

Then, depending on the circumstances, the impression may arise that the new price has been agreed upon. That helped the landlord in the case study discussed, but the outcome depends heavily on the facts. Do not count on it: a signed record remains the safest route.

Assistance with contracts and price changes

Do you want to ensure that a price change is legally sound, or do you need to reclaim or, conversely, defend against an undue payment? The legal experts at MKB Juristen provide practical advice. View our expertise in contract law or read more about our legal assistance for entrepreneurs.

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