Amendment of contracts

There are, however, situations in which it may be necessary to amend or even terminate an agreement. In this article, I will elaborate on the ways in which contracts can be amended.

Unforeseen Circumstances (Article 6:258 BW)

One of the main reasons to amend a contract is the occurrence of unforeseen circumstances. Unforeseen circumstances are circumstances that parties did not take into account when entering into the agreement. For example, a war or a pandemic such as COVID-19. When such circumstances arise, the obligations under the contract may be deemed unreasonably burdensome.

In such cases, Article 6:258 BW provides that the contract can be amended. However, certain conditions must be met. These must be unforeseen circumstances:

1. that occur after the conclusion of the contract and were not known at the time of entering into the agreement;
2. that are not accounted for in the contract; thus, there is no provision included in the agreement;
3. that make it unreasonable to expect compliance with the contract unchanged according to the standards of reasonableness and fairness (Article 6:2 in conjunction with Article 6:248 BW).

The standards of reasonableness and fairness are further defined by applicable legal principles, prevailing legal opinions in the Netherlands, the personal interests of the parties involved, and relevant societal interests (Article 3:12 BW). The non-occurrence of an expected circumstance can also be considered an unforeseen circumstance (HR February 20, 1998, NJ 1998/493 (Briljant/Schreuder)).

Please note that a modification or termination due to unforeseen circumstances under Article 6:258 BW is only possible through via court.

Non-performance (Article 6:265 BW)

Another important reason to amend or even terminate a contract is non-performance. Non-performance occurs when one party fails to fulfill its obligations under the agreement towards the other party. For example, if one party agrees to deliver ten units of a product but only delivers eight. In that case, the other party has the right to adjust its performance to this reduced delivery. This is regulated by Article 6:265 BW.

It should be noted that Article 6:265 BW applies only to reciprocal agreements (Article 6:261 BW); agreements in which each party undertakes an obligation to obtain a performance to which the other party commits itself in return.

By amending the contract, the reciprocal obligations are brought back into balance. Both parties can then fulfill their obligations, albeit in an adjusted form.

Error (Article 6:228 BW)

Dwaling is een andere grond voor wijziging of beëindiging van een overeenkomst. Dit kan zich voordoen wanneer één of beide partijen een verkeerde voorstelling van zaken hebben gehad bij het aangaan van de overeenkomst.

In het Nederlandse recht kennen wij eenzijdige en wederzijdse dwaling. Eenzijdige dwaling houdt in dat één partij een verkeerde voorstelling van zaken heeft. Bijvoorbeeld wanneer een verkoper niet vertelt over een defect aan een product. De benadeelde partij kan dan verzoeken om (gedeeltelijke) vernietiging van de overeenkomst.

Wederzijdse dwaling houdt in dat beide partijen niet op de hoogte waren van bepaalde feiten die essentieel zijn voor de overeenkomst. Bijvoorbeeld wanneer beide partijen niet weten dat een bepaalde financiële regeling op een transactie van toepassing is.

In die gevallen kan artikel 6:228 BW worden ingeroepen om de overeenkomst aan te passen of zelfs geheel te vernietigen.

Remedying Disadvantage

If there is an error, it does not always mean that the contract must be annulled. The counterparty of the erroring party can make a proposal to adjust the consequences of the contract so that the disadvantage of the erroring party is remedied. Article 6:230 BW provides for the possibility of remedying disadvantage.

For example, if someone buys a plot of land for building a house and later discovers that there is an old leaking oil tank in the ground. This was not an unforeseen circumstance; rather, the buyer was simply unaware of it. In such a case, the buyer can request an amendment of the contract based on Article 6:230 BW.

Remedying disadvantage under Article 6:230 BW has always been a last resort for the counterparty of the erroring party to eliminate a successful claim based on mistake; if the disadvantage is remedied, then there is no longer any interest in annulment (paragraph 1). Nowadays, Article 6:230 BW is also invoked as a claim; an erroring party can demand remedying disadvantage from their counterparty (this was established in paragraph 2 in 2019).

By remedying the disadvantage, the contract is amended. Article 6:230 BW thus stands on equal footing with Article 6:258 (unforeseen circumstances). In both cases, a court can be requested to amend the agreement.

Conclusion

Amending contracts is possible in cases of unforeseen circumstances, non-performance, and error. It is important to understand these legal possibilities so that both parties are able to respond adequately to changing circumstances and thus protect their interests. In case of doubt, it is advisable to seek legal advice to ensure that amendments or terminations are carried out correctly according to applicable legislation.

More information

Would you like to know more about the possibilities for amending a (purchase) agreement? Please do not hesitate to contact us.