Chapter 3 - Dutch Law

Summary

Introduction

Dutch law regards the process of contract negotiations as a relationship regulated by law. In the Netherlands, the idea that a party may be bound by law during contractual negotiations goes back to the work of Telders. At the beginning of the twentieth century, this scholar examined situations where an offer could not be revoked and the reasons for this irrevocability. He invoked inter alia the concepts that would frequently be echoed in the subsequent case law and scholarship – those of detrimental reliance and expectation that a contract will be formed. Dutch literature has also acknowledged the cognate French and German doctrines contemporary with the work of Telders. But Dutch law has followed its own path of development. The German concept of fault in conclusion of contract (culpa in contrahendo) attributed to Von Ihering has remained foreign to Dutch law, as has the French doctrine.

The modern Dutch approach to negotiations relies upon three pillars: an overarching duty of reasonableness and fairness (the Dutch concept of bona fides) that is, strictly speaking an issue of tort law, the framework of preliminary agreements, and the general tort law. This Chapter will examine these fields of regulation in order to answer the following question. To what extent may parties modify or waive these rules by organizing their negotiations contractually and what are the consequences of this ‘privatization’ for liability in Dutch law?

The first pillar of regulation is based on the overarching duty of reasonableness and fairness. As the Dutch Civil code (Burgerlijk Wetboek) contains no specific provisions on the process of negotiations, this duty has served as a vehicle for the development of the concept of liability for breaking off negotiations. The Hoge Raad der Nederlanden – the highest judicial authority in the Netherlands – has progressively shaped it by interpreting the general law of obligations. The Hoge Raad has formulated a set of factors to be weighed in order to decide whether breaking off negotiations is acceptable from the point of view of reasonableness and fairness. Based on these factors, withdrawal from negotiations may be regarded as unacceptable (onaanvaardbaar). This may lead to liability of the withdrawing party, and the remedies may go as far as a court order to negotiate further.