Agreements and contracts: all you need to know

What is a contract or agreement?

A contract is an agreement between 2 or more parties. A contract means you must perform a certain duty, or it entitles you to the performance of a duty by someone else. You can use both the words contract and agreement.

Who can enter into a contract?

Both natural persons and the board of a legal entity (for instance a private limited company or BVv) can enter into a contract. You must have legal capacity for the contract to be valid. In other words, you cannot be in receivership (curatele), and you must be over 18. You can look up whether someone is under guardianship in the Central Guardianship and Administration Register (in Dutch).

Contracts with people under 18 years of age

People under 18, (minors), can only enter into a contract with permission from their legal representative (usually the parents or guardians). For age-appropriate purchases, such as small everyday expenses, you may assume that the parent has given consent. If this later turns out not to be the case, the parent may cancel the contract (in Dutch).

Check if the other person is authorised to sign a contract

People who are authorised to sign may sign contracts or perform certain actions on behalf of the company. It is important that the person with whom you conclude a contract is allowed to do this. Otherwise the contract may be invalid. Someone can be fully authorised to sign, or may only sign for certain matters. For example, someone may only sign contracts up to a certain amount.

Read how to check who is authorised to sign contracts.

How do you conclude a contract?

You can conclude a contract in several ways. Do you agree to something in a conversation? Then that is a valid agreement, just as a written one is valid. If a deal is proposed by one party, and the other party accepts, you have a contract.

Some contracts are only valid if they are written. For example, buying or selling a house. A non-competition clause in an employment contract must also be set down in writing.

It is wise to put your agreement in writing and sign together with your client. That way you have proof of the agreement.

Contents of a contract

The main thing to include in the contract is the description of the product or service, the price, and the acceptance by the customer. It also often contains agreements on:

• the duration of the contract
• the notice period
• delivery
• consequences of failure to comply with the contract
• terms of payment and collection
• warranty
• service or updates
• the handling of disputes

When supplying consumers there are rules you must follow. For instance, you have to observe the rules for consumer sales contracts.

What invalidates a contract?

A contract can be ruled invalid or reversed if:

• one of the parties is a minor, or in ward;
• the person signing the agreement is not authorised to represent the organisation or company;
• the contents of the agreement violate the law, the rules of common decency, public safety, or are unreasonable or unfair;
• the information given about the contract was misleading (for instance, if one of the parties entered into the agreement because they had the wrong impression of a product);
• the agreement was entered into under threat, abuse of circumstances or deceit.

General terms and conditions

General terms and conditions are specific agreements that are part of the contract you make . You can use them for more than one comtract. You do not have to draw up new general terms and conditions for each sale you make. This saves time and effort. Your client must be able to find these terms and conditions easily, for example on your website.

Types of agreements

There are many types of agreements:

• You conclude a sales contract or purchase agreement when you supply products or services.
• If you are a self-employed professional, you use model agreements to prove to the Tax Administration that you’re not in your client’s employ.
• If a public authority awards you a project in a tender, you conclude a procurement contract.
• You lay down agreements with the owner of a franchise in a franchise agreement.
• An employment contract is the agreement between employer and employee that contains work arrangements.
• A non-disclosure agreement (NDA) is used to protect confidential information.
• You lay down arrangements on the financing of company equipment and vehicles in a lease contract.
• A rental agreement serves to record arrangements for renting or hiring company accommodation.
• If you want to start a company with others, you can conclude a partnership agreement for your legal business structure.

Do not simply withdraw during negotiations

During negotiations, there is not yet a contract. However, negotiations may be partially binding. The further along the process you are, and the more promises are made, the more you may rely on reaching an agreement. When you have come that far, you cannot simply withdraw from negotiations. If you do, you may have to pay compensation (in Dutch).

Failure to fulfil a contract

Is your contract partner not sticking to the agreements? There are people and organisations you can turn to for legal assistance.