Am I allowed to buy goods very cheaply?

Yes, as an entrepreneur, you are allowed to buy goods well below market price. Freedom of contract is the basic principle: a buyer does not have to pay the full market value, even if you know that something is worth more than the asking price. However, two limits do apply. You may not mislead the seller ( you may not provide him with incorrect or incomplete information about the value), and you may not contribute to the detriment of creditors (the actio pauliana). If you stay within those limits, a discounted purchase is fully legitimate and the sale remains valid.

Buying below market price: is that allowed? Short answer

From antiques to commercial vehicles: as an entrepreneur, you maximize your profit in two ways. You sell at a good price, or you limit your purchasing costs. The latter is permitted. You do not have to pay a seller the full market value, even if you know that an item is worth more than the asking price.

That is logical, too. As a dealer, you still have to find buyers, negotiate, sometimes restore, and pay your fixed costs. A lower offer to a well-informed seller is therefore not a problem. In short:

• It is allowed: making a competitive offer, negotiating smartly, and leveraging your market knowledge.
• Prohibited: misleading the seller about the value (misrepresentation) or assisting in withdrawing goods from the seller's creditors (Pauliana).

The freedom to buy at low prices therefore has two exceptions you need to be aware of, as they can invalidate the purchase afterwards. We elaborate on both limits below.

Threshold 1: there must be no question of error

Error means that an agreement is concluded on the basis of a false representation of facts. The law protects parties against this. In the case of a purchase below market price, error primarily revolves around the question of whether you, as the buyer, have sufficiently informed the seller.

There may be, among other things, a case of error if:

• you provide incorrect information, for example that an antique poffertjes pan is ready for the scrap heap, whereas it actually has collector's value;
• you withhold relevant information while you do know the true value and the other party was entitled to expect it;
• both parties proceed from the same incorrect assumption.

When do you have to report something? (duty to disclose)

Whether you have a duty to disclose depends on the circumstances and your expertise. More knowledge and openness can be expected from a specialized antique dealer than from a local hardware store owner. The greater your knowledge advantage regarding the value, the more likely you are to be expected to say something about it. At the same time, the seller also has their own duty to investigate. The boundary between “hard bargaining” and “misleading the other party” is therefore factual and can vary depending on the situation.

The difference between hard negotiating and misleading

Offering a low price is not a mistake. You do not need to shake a seller awake or analyze the market for them. The tipping point lies in actively misleading (saying something false) or deliberately withholding information that you should have shared. For example, if you, as an expert, immediately realize that an “old little painting” is a signed work, remaining silent is riskier than when two laypeople disagree about the value.

What are the consequences of error?

If a claim based on error is successful, the purchase agreement can be annulled. This means that the sale is reversed: you return the goods and the seller pays you back. This protection works both ways. If a seller declares something to be antique while it turns out to be worthless, you, as the buyer, can invoke error. Fair is fair.

Limit 2: you may not act fraudulently

The second limit is the so-called actio pauliana (paulian act). This applies when a transaction disadvantages the seller's creditors. Simply put, an injured party can challenge the sale when:

• the sale prejudices one or more creditors, and
• you as the buyer knew or ought to have known that that disadvantage would be the result.

Consider an heir who secretly withholds old coins and sells them to you, while you know that other heirs or creditors are being disadvantaged. If you knew this, or should have known it, you run the risk that the sale will be annulled. If bankruptcy is involved, a bankruptcy trustee can also reverse such a transaction under certain conditions.

How do you recognize a risky salesperson?

You don't have to be a detective, but look out for signs that assets are being withdrawn from creditors:

• the seller is in a hurry and wants to settle in cash and off the books;
• There are ongoing collections, seizures, or an impending bankruptcy;
• The seller is not the sole beneficiary, for example in the case of an undivided estate or a joint venture.

If you are unsure about outstanding claims against the seller, take a look at our debt collection approach to understand how creditors enforce their rights.

What does this mean for you as a buyer?

If the sale is challenged due to a <i>pauliana</i> action, you must return the goods. If they have already been resold, compensation may be applicable. In such situations, you may be liable together with the seller, meaning the injured party can turn to both you and the seller. Therefore, do not buy blindly from someone you suspect is withdrawing goods from their creditors.

How do you protect yourself with a good purchase agreement?

You therefore do not have to pay the market value, but you must inform the seller honestly. The best protection against future claims is recorded in writing. A good purchase agreement limits the risk of a successful appeal based on error and of surprises afterwards.

Practical points to include in the agreement:

• Describe it thoroughly and accurately, and where possible, attach a valuation or survey report. This establishes what information was known.
• Have the seller declare that no third-party rights are violated by the sale. That does not cover everything, but it shows that you were unaware of any disadvantage.
• Include an indemnity clause : agree that the seller is liable if their statements turn out to be incorrect, so that you can hold them accountable afterwards.
• Briefly document the justification for the price, for example, stating that the condition, origin, or speed of sale explains the price. This makes it more difficult to dismiss the deal as misleading or fraudulent later on.

If you have doubts about the legal validity of a specific deal, have the agreements checked under contract law before you sign.

Step-by-step plan: safe and smart purchasing

1. Inquire honestly. Do not provide false information and do not conceal anything you should reasonably have shared.
2. Check the seller. Watch out for signs of prejudice to creditors, seizure, or bankruptcy.
3. Document in writing. Use a purchase agreement with an accurate description, a statement regarding third-party rights, and an indemnity.
4. Retain evidence. Keep correspondence, valuations, and price substantiation in case a purchase is disputed later.
5. In doubt? Have it checked before you sign, especially for large amounts or a remarkably low price.

Frequently Asked Questions

Am I allowed to purchase below market value as an entrepreneur?

Yes. Freedom of contract is the basic principle, and you do not have to pay the full market value. You only must not provide the seller with incorrect or incomplete information, nor cooperate in prejudging his creditors.

Should I mention that a product is worth more than the asking price?

That depends on the circumstances and your expertise. The greater your knowledge advantage and the greater the likelihood of a duty to disclose that information the other party can reasonably expect from you, the greater the chance. Additionally, the seller has their own duty to investigate.

What is error in a purchase agreement?

Error is a misrepresentation of facts that has influenced the agreement. If a claim based on error is successful, the purchase can be annulled and mutual performance must be reversed.

What is a fraudulent act (actio pauliana)?

This involves detriment to creditors through a transaction, while the parties involved knew or ought to have known that such detriment would result. An aggrieved party or a trustee may have such a transaction challenged subject to conditions.

Can a purchase that is too cheap be reversed later?

Yes, that is possible if the sale was concluded through error or if there is fraudulent conduct. A valid, honestly concluded sale below market price, on the other hand, remains valid, even if the price was competitive.

Is buying below market price the same as receiving stolen goods?

No. Receiving stolen goods involves buying or possessing goods that you know or have reason to suspect originate from theft. A low price is not receiving stolen goods in itself, but a conspicuously low price can be a signal that you need to be extra alert regarding the origin of the goods.

What can I do to legally secure the purchase?

Document the transaction in writing, describe the property accurately, include a valuation where possible, and have the seller declare that no third-party rights are being violated. An indemnity clause further limits your risk.

Buy safely and at competitive prices? MKB Juristen helps

If you intend to consistently purchase well below market price, a watertight purchase agreement is indispensable. At MKB Juristen, we draft a model agreement tailored to the goods you buy, so you can use it immediately for all your purchases. If you have questions about an ongoing deal or your position as a buyer, please check our legal assistance for entrepreneurs.

Schedule a free consultation and avoid unpleasant surprises with your next purchase.