Drafting General Terms and Conditions for Wholesale Trade

As a wholesaler, you enter into countless purchase agreements with customers daily, often based on orders, emails, or telephone conversations without a comprehensive contract. General terms and conditions form the legal foundation for all these transactions: they determine when you deliver, when payment is due, who is liable for damages, and what happens if a customer fails to pay or pays late. Without your own terms and conditions, you fall back on the statutory regime, which in many respects is to the customer's advantage.

For a wholesaler, the main risks differ from those for a service provider. You supply physical goods, often in large volumes, with tight margins and long payment terms throughout the supply chain. An unpaid batch of inventory or a customer facing financial difficulties directly impacts your working capital. Good general terms and conditions translate these trade risks into enforceable agreements.

General terms and conditions bind your customer only if you have offered him a reasonable opportunity to take notice of them (Article 6:233 sub b of the Dutch Civil Code). The main rule for this is delivery: you provide the terms and conditions before or at the conclusion of the agreement (Article 6:234 of the Dutch Civil Code). If you fail to do so, your customer may invalidate the terms and conditions, and your limitation of liability, for example, will cease to apply.

This represents an important development for wholesale trade. On June 2, 2023 (ECLI:NL:HR:2023:835), the Supreme Court confirmed that wholesale trade qualifies as a service within the meaning of the Services Directive. As a result, the more flexible regime of Article 6:230c of the Dutch Civil Code applies to wholesale trade: you can comply with the duty to provide information by making your terms and conditions easily accessible electronically, for example via a clear reference to a fixed webpage with a saveable PDF file. Physical handover with every order is then no longer strictly necessary.

We recommend including the reference in every quotation, order confirmation, and invoice, and placing the terms and conditions on a dedicated, permanently accessible page. A reference added only to the invoice or packing slip after the fact is and remains too late.

Delivery is at the heart of your terms and conditions as a wholesaler. Specify at what point the goods pass to the buyer's risk, whether you deliver ex works or free on board, and which delivery condition applies. The use of Incoterms (such as EXW, FCA, or DAP) prevents disputes regarding transport costs and the transfer of risk, especially in international trade.

In addition, the obligation to take delivery is important: what happens if the buyer fails to take delivery of ordered goods or fails to comply with a framework agreement? Also regulate partial deliveries, delivery times as indicative rather than binding, and the consequences of force majeure and disrupted supply chains. This prevents a delay at your own supplier from automatically leading to your liability.

For a wholesaler, the retention of title clause is often the most valuable provision. Pursuant to Article 3:92 of the Dutch Civil Code, you retain title to delivered goods until the purchaser has paid in full. If your purchaser runs into payment difficulties or goes bankrupt, you can reclaim the unpaid, identifiable stock instead of having to wait in line as an ordinary creditor.

Conditions apply to a legally valid retention of title: it must be agreed in writing and no later than upon delivery, i.e., in a timely manner via your general terms and conditions. Please note that the retention of title may lose its effect if goods are mixed, incorporated, or processed into a new item and are no longer independently identifiable. In the event of resale to third parties in good faith, your claim to those goods lapses. For wholesalers supplying resellers, it is therefore important to include a resale and distribution arrangement.

Establish clear payment terms and determine the consequences of late payment: statutory commercial interest (Article 6:119a of the Dutch Civil Code) and extrajudicial collection costs. For wholesale businesses, the timing of invoicing is also relevant: do you invoice upon order, upon delivery, or retrospectively? A right of suspension and the right to cease further deliveries in the event of non-payment protect your cash position.

Furthermore, include a short, clear claims period: within what timeframe must the purchaser report visible and hidden defects? A professional purchaser has a duty to inspect and complain (Article 6:89 and Article 7:23 of the Dutch Civil Code). Align your warranty with the manufacturer's warranty provided by your supplier, ensuring that you do not guarantee more than you receive from your own supplier.

A single defective batch of goods can lead to production downtime, recalls, or claims at a customer that far exceed the value of your delivery. Therefore, a balanced limitation of liability is essential: limit your liability, for example, to the invoice amount or the insured sum, exclude consequential damages, and set limitation periods for claims.

In business-to-business (B2B) relationships, you have considerable contractual freedom to limit liability, provided the limitation is not unreasonably burdensome. If you also supply to consumers, stricter rules apply: provisions on the black list (Article 6:236 of the Dutch Civil Code) are always voidable, and those on the grey list (Article 6:237 of the Dutch Civil Code) are presumed to be unreasonably burdensome. For a pure wholesaler supplying exclusively to the business, this is less relevant, but for mixed sales, a separate set of consumer provisions is advisable.

You are not required to file your general terms and conditions with the Chamber of Commerce or a court, but it can be practical as proof of their content and version. More importantly, you must keep the terms up to date: price change clauses, amended Incoterms versions, and new laws and regulations must be incorporated. Therefore, use a clear version date and ensure that the accessible version always corresponds to the version to which you refer in your documents.

In international trade, furthermore, pay attention to choice of law and the applicable law, as well as to the overlap with purchasing conditions of major customers. In the event of conflicting conditions, the battle of forms rule of Article 6:225 paragraph 3 of the Dutch Civil Code applies in principle, whereby the conditions of the first party take precedence unless the other party expressly rejects them.

Standard terms and conditions from the internet rarely align with your product range, margins, delivery conditions, and customers. A set that is legally sound and fits your business practices prevents your most important provisions, such as retention of title and limitation of liability, from being invalidated in a dispute.

MKB Juristen drafts your custom general terms and conditions for your wholesale business, at a fixed price upfront and without surprises. We incorporate the correct delivery, payment, and security provisions and ensure that your duty to provide information is demonstrably met. Contact us and you will know exactly where you stand.