Drafting General Terms and Conditions for a Sole Proprietorship

As the owner of a sole proprietorship, you are liable with your private assets for the debts and obligations of your business. Unlike with a private limited company (BV), there is no legal separation between your business and personal assets. As a result, a damage claim or an unpaid assignment hits you directly in your own wallet. For a sole proprietorship, therefore, good general terms and conditions are not a formality, but a first line of defense against unlimited personal liability.

With general terms and conditions, you establish the rules of the game once that apply to all your customers: payment terms, delivery times, warranty, liability, and dispute resolution. You then do not have to renegotiate these agreements with every quotation. For a freelancer or independent entrepreneur with limited time and no in-house legal department, this is an efficient way to keep a grip on your business risks.

Having general terms and conditions is not legally mandatory. Nevertheless, it is advisable for virtually every sole proprietorship. Without your own terms and conditions, only the general rules of the Civil Code apply, and these rarely work in your favor in the event of a conflict. For example, without an agreement, a statutory payment term applies, and you cannot limit your liability in advance.

The law does set limits on what you may include in your terms and conditions and how you declare them applicable. Conditions that are unreasonably burdensome are voidable (Article 6:233 of the Dutch Civil Code). Therefore, you cannot enforce whatever you please: the content must be reasonable, and the manner in which you make the terms and conditions available to your customer must be correct.

General terms and conditions apply only if your customer could reasonably have been aware of them before or at the time of concluding the agreement. This is the duty to inform or the duty to provide under Articles 6:233 and 6:234 of the Dutch Civil Code. In practice, this means that you send the terms and conditions along with your quotation or order confirmation, print them on the back of your quotation, or hand them over or send them before concluding the agreement.

If you fail to provide the terms and conditions, your customer can invalidate the terms (or a specific provision), leaving you empty-handed. A mere reference such as "our general terms and conditions apply to all our services," without the customer actually having received the text, is usually insufficient. For agreements made via your website, you may also make the terms and conditions available electronically, provided the customer can save and consult them.

For a sole proprietorship, the liability clause is the most important item in the entire set of terms and conditions. Because you are personally liable, a single substantial damage claim can jeopardize your business and your private assets. A good clause limits your liability, for example, to the invoice amount of the relevant assignment or to the amount paid out by your insurer, and excludes indirect damages such as lost profits.

However, you may never completely exclude your liability. A limitation that eliminates all liability, or that excludes intent or willful recklessness, is contrary to reasonableness and may be annulled. The key is to limit your risk to a realistic and insurable level, without exceeding the limits of what is permissible. Furthermore, align the clause with your professional liability or business liability insurance.

The content of general terms and conditions for a sole proprietorship selling products differs significantly from that of a service provider or freelancer. A webshop or retailer requires provisions regarding delivery, the right of withdrawal, retention of title, and warranty. A service provider (for example, a consultant, designer, or construction worker), on the other hand, requires clauses regarding additional work, completion, intellectual property, and the delineation of what is and is not covered by the assignment.

If you sell products, a retention of title clause prevents you from losing your goods if the customer fails to pay. If you provide services, a clear description of the assignment protects you against endless free adjustments and disputes regarding the agreed performance. Pain points vary by industry; that is why ready-made sample terms and conditions from the internet often do not work well and contain irrelevant or, conversely, missing clauses.

If you supply to private customers, stricter rules apply. The law includes a blacklist (Article 6:236 of the Dutch Civil Code) containing clauses that are always unreasonably burdensome and therefore prohibited, and a grey list (Article 6:237 of the Dutch Civil Code) containing clauses that are presumably unreasonable. The blacklist includes, for example, provisions that deprive the consumer of the right to terminate the agreement. The grey list includes, among other things, unusually long delivery periods.

If you sell online to consumers, you must respect the statutory right of withdrawal of fourteen days and clearly inform them about it. Furthermore, small business owners and self-employed professionals can sometimes invoke this consumer protection through the so-called "reflex effect." A sole proprietorship that supplies both business and private individuals would therefore do well to carefully tailor the terms and conditions to the correct target group.

Filing your general terms and conditions with the Chamber of Commerce or the court is not mandatory. However, it can be useful: by doing so, you officially record which version of your terms and conditions was in effect at a specific time. In the event of a dispute, you can then easily prove what your terms and conditions were. Please note: filing does not release you from the obligation to provide the terms to the customer. You must still provide the terms and conditions to your customer; merely referring to the filed copy is insufficient.

Do you want to be certain that your liability is properly limited, that you comply with the duty to inform, and that your terms and conditions are tailored to your industry? Then it pays to have your general terms and conditions drafted by a legal expert. At MKB Juristen, we draft custom terms and conditions for your sole proprietorship that are legally correct and tailored to your service or product. Thanks to an upfront fixed price, you know exactly where you stand without any surprises afterwards. This way, you protect both your business and your private assets with terms and conditions that hold up in practice.