Content of contracts

Content of contracts

You deal with contracts on a daily basis. There are various types of contracts, so the content differs from one to another. Contract law governs the legal relationship between two or more parties and the agreements they are required to adhere to. Many contracts are agreed upon verbally. A disadvantage of making a verbal agreement is that it can be difficult to prove who said what. Therefore, it is preferable to record agreements in writing.

The content of a contract must contain the following points:

• Description of service or product;
• The price;
• Acceptance by the customer;
• Duration of the contract and;
• Termination of the contract

We assist a wide range of clients in drafting, reviewing, and interpreting contracts. In practice, conflicts arising from contractual relationships occur regularly. These conflicts concern, for example, the interpretation of contract provisions, breach of contract (non-performance), and claims for damages.
We have extensive experience in contractual dispute resolution, whether through negotiations or judicial proceedings. We have an experienced team of lawyers and legal experts in the field of contract law. Please contact us to discuss the possibilities.

The essentials: no core, no contract

The content of a contract begins with the so-called essentials: the agreements that touch upon the core of the performance and without which there is no agreement. According to Article 6:213 of the Dutch Civil Code, an agreement is a multilateral legal act whereby parties bind themselves to one another. Pursuant to Article 6:217 of the Dutch Civil Code, that agreement is concluded through offer and acceptance. The offer must contain the essential elements, so that the agreement is concluded as soon as the other party accepts this offer.

What constitutes the essentials depends on the type of contract and the circumstances. In a sales agreement, these are typically the object (which item or service) and the price; in a share transaction, the number of shares and the purchase price. If there is no agreement on the essentials, there is no valid contract. For our clients – from international corporations to the baker on the corner – our lawyers and in-house counsel verify that the core is watertight before the rest of the contract is drafted.

Which provisions belong in a good contract?

In addition to the essentials, a comprehensive contract contains a number of provisions that prevent disputes and strengthen the legal position of the parties. In practice, we pay attention to:

• Parties and authority: the correct names and details, plus verification that the signatory has the authority to sign;
• Recitals: the background and intention of the parties, which aids in the interpretation of the contract;
• Mutual obligations: exactly what each party delivers, performs, and pays;
• Term and termination: duration, extension, cancellation and dissolution and cancellation;
• Liability: an exemption clause that limits liability or limits it in amount;
• Force majeure: situations which prevent performance without a party being in default;
• Disputes and applicable law: the competent court or arbitration, and which law applies;
• General terms and conditions: the proper reference and provision, so that the conditions become part of the contract.

Our legal experts tailor those provisions to the situation: a standard corporate procurement contract requires different clauses than the agreement of a self-employed professional or SME.

Liability, force majeure and general terms and conditions

A significant part of the contract content is not found in the main contract but in the general terms and conditions. These contain recurring agreements regarding payment terms, limitation of liability (the exoneration clause), force majeure, suspension, and intellectual property rights. You cannot completely exclude liability, but you can limit it: specify for which damages you are and are not liable, and up to what amount. Unreasonably onerous clauses can be annulled pursuant to the provisions in Section 6.5.3 of the Dutch Civil Code (Articles 6:231 to 6:247 of the Civil Code), certainly in relation to consumers and small counterparties. We ensure that your terms and conditions are both enforceable and correctly declared applicable.

Interpretation of the contract: not only the literal text

The content of a contract is not always determined by the literal text alone. When interpreting a contract, the judge considers what the parties have declared to each other and what they could reasonably expect from one another – the so-called Haviltex standard. In addition, the principles of reasonableness and fairness under Article 6:248 of the Dutch Civil Code have a supplementary and restrictive effect on the agreements. Clear, concrete wording prevents disputes afterwards. Should a conflict nevertheless arise regarding interpretation, breach of contract, or a failure to perform, our lawyers will assist you in negotiations or proceedings, including any potential damages.

Assistance with the content of your contracts

Whether you need a new contract drafted, wish to have a received agreement reviewed, or are embroiled in a dispute: our mixed teams of lawyers and in-house counsel can help you. We serve large enterprises and (semi-)governmental bodies as well as individual entrepreneurs, and provide input regarding content, risks, and feasibility. Contract content is part of our broader expertise in Contract Law. Contact us to discuss your situation without obligation.