9 April 2025
Every entrepreneur benefits from clear and enforceable agreements. But how should you assess a contract in general? Is there a step-by-step approach you can follow? In this blog, we share some tips to help you quickly understand and draft contracts.
Before diving into the general structure, it is worth noting that the Dutch Civil Code treats certain contracts separately. For example: Sales and Exchange Agreements (including consumer sales), Credit Agreements, Lease Agreements, Agricultural Tenancy, Employment Contracts, and Service Agreements.
Identifying the type of contract and determining which specific provisions or conditions should be included can already provide much-needed clarity
Every contract starts by clearly identifying the parties involved.
This could be a legal entity (such as a BV, NV, or Foundation) or a natural person (such as a private individual, or partners in a general partnership or limited partnership).
If it concerns a legal entity, you will find all relevant information at the Chamber of Commerce.
Make sure to record the name and address accurately. Be sure to ask questions if anything about the name or other party details is unclear.
The last thing you want is to enter into an agreement with a party you didn’t intend to, who is not legally bound to you.
It is also common to include references in this section, such as: “X BV, hereinafter referred to as ‘X’, ‘Contractor’ or ‘Employer’,” etc.
This section explains why the contract is being entered into and the circumstances under which the agreement is made.
This part is important because, beyond the articles (see next section), the preamble can provide insight into the parties’ intentions if later there is a dispute about interpreting the agreement. It often includes a brief summary of the background of the parties.
A common structure for a preamble is:
“Whereas:
This section is typically the most detailed and, in disputes, it is often the part that is examined most closely.
It is important to clearly define what has been agreed upon. But it is equally important to discuss with your contracting party the consequences of what happens if things do not go according to plan.
A common structure is as follows.
First, record the mutual obligations: Party A will do xyz for Party B, and Party B will do abc in return. If you already have questions about what your contracting party is committing to, this is the section to clarify. Don’t hesitate to ask them to explain their intentions as if you were unfamiliar with the arrangement.
For example, in a sales agreement, Party A sells a product to Party B, who pays a specified amount. Or Party A will carry out work for Party B in exchange for payment.
This section should also specify whether Party A will perform the work or deliver the goods at their own discretion or under certain conditions. Check whether the description of the goods or services is complete and accurate.
Next, specify the duration. For instance, within what period must a good or service be delivered, or for what term is the agreement valid?
Then include provisions related to payment: the amount, payment schedule, whether amounts are inclusive or exclusive of VAT, payment deadlines, invoice requirements, and payment details.
After payment terms, parties often include additional provisions. These may cover how the parties will act in unforeseen circumstances, such as if there is extra work, intellectual property, third-party ownership, use of materials, or the involvement of third parties.
Parties should agree on when the contract (such as an assignment or delivery) ends, or when they consider the obligations fully performed and payment received.
It is also important to agree on the circumstances under which one party can terminate the agreement. A termination period and potential penalties may also be included.
Other common clauses cover liability and its consequences.
The contract usually ends with provisions on applicable general terms and conditions, confidentiality, and which law and court will apply in case of a dispute.
Finally, specify which person signs on behalf of each party. It is important that the correct person is authorized to represent the party.
This article outlines the structure of a contract to help you quickly get to the core. The key is that you fully understand what is being agreed upon. If anything is unclear: ask questions. If it’s unclear to you, it’s likely unclear to the other party as well. Often, standard clauses are included out of habit. In case of a dispute, courts look not only at the literal wording but also at the parties’ intentions and what they could reasonably expect from each other.
Do you have questions about this topic or would you like advice on a similar matter? Feel free to contact us
