Breach of contract business advice: what to do in case of non-performance?

What exactly is breach of contract in the business world?

In the legal world, a breach of contract is also referred to as non-performance. This may sound serious, but in fact, it simply means that a business partner fails to fulfill the agreements made in a contract , or fails to do so in a timely or complete manner. Dutch law states that any failure obliges the debtor to compensate the other party for the damage suffered as a result. However, not all agreements are the same. It is essential to understand the type of obligation stated on paper before taking action.

There is a crucial distinction between an obligation of result and an obligation of best effort. With an obligation of result, the counterparty promises a concrete end result, such as delivering one hundred laptops on a specific date. If these are not delivered, the breach of contract is immediately established. With an obligation of best effort, often the case with advisors or consultants, the party merely promises to do their utmost. Proving a fault is considerably more complex in this regard. When facing a conflict, professional business advice on breach of contract indispensable to determine whether you have a strong legal position.

To lay a solid foundation: what exactly is breach of contract? Internationally, it concerns the violation of a binding agreement, but in Dutch practice, it revolves primarily around the culpability of that violation and the burden of proof arising from your written agreement.

Breach of contract versus force majeure

Not every error automatically leads to compensation. Sometimes a party can simply do nothing about the situation. Consider extreme natural phenomena or sudden government interventions that make delivery virtually impossible. We call this force majeure. In modern practice, we sometimes see this during global logistics crises, although much falls under normal business risk. It is up to the defaulting party to prove that the error cannot be attributed to them. As an entrepreneur, you must remain vigilant: is this truly an unforeseen situation, or is it a case of a culpable error due to poor management on the part of your supplier?

The impact of breach of contract on your business operations

The consequences of a breach of contract often extend beyond just an undelivered product. A chain reaction is set in motion within your own planning. Direct damage is usually easy to quantify, such as the extra costs incurred to purchase replacement stock elsewhere. Indirect damage, also known as consequential damage such as lost profits, is more difficult to claim but often has a much more significant impact on your cash flow. Therefore, start building a case file immediately. Carefully preserve emails, invoices, and meeting minutes. In addition to the figures, the business relationship plays a major role. Sometimes a partner is too valuable to sever the bond immediately. A pragmatic lawyer therefore looks not only at the law but also at long-term commercial interests.

The first steps in the event of a business contract breach

As soon as you notice that a business partner is not honoring the agreements, your first instinct might be to terminate the partnership immediately. However, an impulsive reaction is rarely the most effective. The path to a solution begins with your own records. Retrieve the contract and the accompanying terms and conditions. Are there specific agreements regarding delivery times or quality standards? Often, the fine print contains provisions on how disputes must be resolved before you can go to court. For entrepreneurs in need of a clear plan, sound business advice on breach of contract the foundation for avoiding unnecessary legal costs.

A pragmatic approach often works best in practice. Before resorting to heavy artillery, an informal conversation or a business email is the appropriate de-escalation step. Sometimes there is a miscommunication or a temporary problem on the part of the other party that can be easily resolved. It is wise to already consider the first steps regarding breach of contract, objectively determining your ultimate goal. Do you want the agreement to be honored, do you want to pause payments, or has the trust been so damaged that you wish to terminate the agreement entirely? If you are considering ending the collaboration permanently, it is advisable to legal advice regarding contract termination , so that you are not faced with unexpected notice periods or damage claims.

The importance of building a case file

Should informal consultation yield no results, your file is your most important weapon. Document all communication from the very first moment of doubt. Do not just save emails, but also create brief summaries of telephone contacts and send these to the other party for confirmation. A good file contains a timeline of the agreements made, the instances of non-compliance, and evidence of the damage you suffer as a result. This overview forms the basis for a potential official notice of default, formally giving the other party a final chance to rectify the error.

Informal contact versus formal summons

When does the friendly reminder end and the legal battle begin? That depends heavily on your partner's attitude and the urgency of the delivery. Waiting too long to take formal action is risky; you may unintentionally give the impression that you agree to the delay. If it specifically concerns outstanding invoices due to non-performance, legal advice on non-payment can help you take the right collection steps. Should you be unsure about the tone of your correspondence, a quick ContractCheck™ provide the necessary certainty to strengthen your position without unnecessarily damaging the relationship.

Your legal options: performance, dissolution, or damages?

What is your next move when talking no longer helps? When a business partner fails to honor agreements, the law provides you with various tools. It is important to determine which remedy best aligns with your business interests. Do you want to repair the relationship and still fulfill the agreements made? Then you demand compliance. Is the delay unacceptable to you, and do you want to terminate the agreement immediately? Then dissolution comes into play. In many cases, a combination with compensation is possible to limit the financial impact. For an effective approach, professional business advice on breach of contract essential to determine which route has the best chance of success.

Sometimes it is wise to pause your own obligations first. We call this suspension. If your supplier fails to deliver, in many cases you do not have to pay either. This is a powerful means of pressure to get the other party moving again. The legal basis for claiming damages can be found in Article 6:74 of the Dutch Civil Code. This states that any failure to perform an obligation obliges the debtor to compensate for the damage, provided that this failure can be attributed to him.

When do you opt for dissolution?

Dissolution is a drastic step in which you effectively terminate the contract. Unlike termination, where you end the relationship for the future, dissolution creates obligations of restitution. This means that payments already made must be refunded and delivered goods returned. Please note: dissolution is usually only possible if the other party is in default. This default often only occurs after a formal notice of default has failed to yield results. It is therefore not a button you can simply press without proper preparation. If you wish to terminate the agreement via notice of termination instead of dissolution, please read our comprehensive guide on legal advice regarding contract termination to understand the applicable rules and time limits.

Claiming compensation

Calculating the exact damages is often more complex than it seems. You consider the difference between your current situation and the situation you would have been in if the agreements had been properly adhered to. Take into account the limitation of liability often stated in your partner's general terms and conditions. To avoid such legal pitfalls and safeguard your own right to compensation, a preventive ContractCheck™ a smart investment for any entrepreneur looking to minimize damage claims.

The importance of a proper notice of default

A notice of default is the legal key that opens the door to compensation and dissolution. Without this formal document, you are left empty-handed in most cases, even if the breach of contract is obvious. The purpose of this letter is simple: you give the other party a final, reasonable chance to still fulfill the agreements. Only when that period expires unused does so-called default occur. This is a crucial legal status. Once a party is in default, you can truly take stronger action. For entrepreneurs who get stuck in this process, professional business advice on breach of contract the necessary guidance to prevent formal errors.

Many entrepreneurs make the mistake of remaining too vague in their formal demand. A phrase like “we hope you deliver soon” has no legal value. You must describe crystal clear exactly what is wrong with the performance and within what exact timeframe you expect a solution. Default also causes the clock for statutory commercial interest to start running. Did you know that, since July 2025, this interest rate for business transactions amounts to no less than 10.15%? This is a powerful financial argument to increase the pressure on your debtor or supplier.

What is the minimum content of a notice of default?

A watertight letter always contains a reference to the specific agreements or articles of your contract that are not being complied with. Provide a clear description of the shortcoming. Furthermore, the set timeframe must be reasonable; seven days is often sufficient for a simple payment, but for complex repairs, this may be longer. Always end the letter by stating that, in the absence of action, you will take further legal steps and claim damages.

The role of your general terms and conditions

Your position in the event of a breach of contract is largely determined by the fine print you agreed upon in advance. With tailored general terms and conditions, you can significantly expedite the procedure in the event of non-performance. For example, you can stipulate that default occurs immediately in certain situations without the need for a notice of default. You can also pre-determine the amount of collection costs and interest. Do take note of the legislative changes of 2026; unreasonable clauses that unduly disadvantage the counterparty are being set aside by judges more quickly than before. Do you want to be certain that your documentation still meets the latest requirements? Then have your current contracts reviewed by an expert from MKB Juristen to safeguard your legal certainty for the future.

How to prevent future breach of contract with the ContractCheck™

Prevention is better than cure. That sounds like a cliché, but in the legal world, it is a harsh business reality. Litigation costs time, energy, and money that you would rather invest in the growth of your company. The philosophy of MKB Juristen is therefore simple: ensure that your foundation is so solid that a conflict does not even get the chance to escalate. Many entrepreneurs resort to standard templates from the internet, but these often fall short in the event of an actual breach of contract. They are too general and do not take into account your specific business operations or the stricter rules regarding transparency from 2026. For sound business advice on breach of contract, looking ahead is essential.

A periodic review of your business agreements is not a luxury. The market changes, and the law evolves with it. By regularly scrutinizing your contracts, you anticipate risks before they become a problem. With us, you gain direct access to expert assistance. This offers you the peace of mind of professional support, but without the intimidating cost structure of a large law firm. We stand by your side as a down-to-earth partner who understands that a contract should primarily help you do good business.

The ContractCheck™: certainty for entrepreneurs

The ContractCheck™ acts as the ultimate risk analysis for SMEs, where we meticulously scan your current agreements for legal weaknesses. We critically examine the provisions regarding non-performance and termination. Are the time limits realistic? Is liability sufficiently covered? By identifying and repairing these weak points in advance, you significantly reduce the likelihood of protracted disputes afterwards. It gives you the assurance that, in the event of a potential breach of contract, you can immediately translate business advice into action, simply because your documentation is correct.

Custom solutions for your specific industry

Every industry has its own risks. A construction contract requires different guarantees and penalty clauses than an IT contract focusing on service levels and intellectual property. That is why we offer legal assistance that seamlessly aligns with your daily practice. Our legal experts speak the language of the modern entrepreneur and understand that a contract must remain workable for both parties. Do you want to minimize your risks and strengthen your legal position? Contact us for a no-obligation consultation regarding your contracts and discover how we can unburden you.