Common use of Termination for Breach of Contract Clause in Contracts

Termination for Breach of Contract. ‌ 1. The consequences of failing to fulfil an obligation (breach of contract) are governed by the Dutch Civil Code. The Dutch Civil Code contains provisions which determine when a failure is attributable and under which conditions the creditor(s) is (are) entitled to compensation. If parties do not include provisions regarding termination for breach, the provisions in the Dutch Civil Code will apply. Please bear in mind that article 6:265 of the Dutch Civil Code allows the rescission of a mutual agreement (e.g. a consortium agreement) in full or in part for every failure of a party in the performance of one of his obligations, unless the failure, given its specific nature or minor importance, does not justify this rescission and its legal effects. 2. However, as this section of the Dutch Civil Code is (mostly) permissive law, it is possible to derogate from the articles of this section of the Civil Code. The consortium agreement can set out circumstances in which a party can be terminated, e.g. if a party fails to perform on time or according to the full project proposal or does not perform at all. The provisions should include a formal notification procedure (e.g. a Notice of default) and a reasonable term for repairing the alleged breach. If after the reasonable term, the party has not complied, default arises and the other parties can terminate the defaulting party and demand compensation (unless the defaulting party can claim Force Majeure). With regard to the compensation the remaining parties are entitled to, please take into account the provisions with regard to the limitation of contractual liabilities. 3. If the fulfilment of a party’s obligations under the consortium agreement is permanently or temporarily impossible, this procedure need not be followed and the obligation of the party that is in breach to pay a compensation arises automatically (unless that party can claim Force Majeure).

Termination for Breach of Contract. ‌ 1. The consequences of failing to fulfil an obligation (breach of contract) are governed by the Dutch Civil Code. The Dutch Civil Code contains provisions which determine when a failure is attributable and under which conditions the creditor(s) is (are) entitled to compensation. If parties do not include provisions regarding termination for breach, the provisions in the Dutch Civil Code will apply. Please bear in mind that article 6:265 of the Dutch Civil Code allows the rescission of a mutual agreement (e.g. a consortium agreement) in full or in part for every failure of a party in the performance of one of his obligations, unless the failure, given its specific nature or minor importance, does not justify this rescission and its legal effects. 2. However, as this section of the Dutch Civil Code is (mostly) permissive law, it is possible to derogate from the articles of this section of the Civil Code. The consortium agreement can set out circumstances in which a party can be terminated, e.g. if a party fails to perform on time or according to the full project proposal or does not perform at all. The provisions should include a formal notification procedure (e.g. a Notice of default) and a reasonable term for repairing the alleged breach. If after the reasonable term, the party has not complied, default arises and the other parties can terminate the defaulting party and demand compensation (unless the defaulting party can claim Force Majeure). With regard to the compensation the remaining parties are entitled to, please take into account the provisions with regard to the limitation of contractual liabilities. 3. If the fulfilment of a party’s obligations under the consortium agreement is permanently or temporarily impossible, this procedure need not be followed and the obligation of the party that is in breach to pay a compensation arises automatically (unless that party can claim Force Majeure).