General terms and conditions: a must for any international company
Although Dutch businesses are not obligated to use general terms and conditions, they are well-advised to have them in place, especially if they operate mostly in the B2B domain. General terms and conditions strengthen a business’s legal position in the Netherlands, provided that they have been properly declared to apply and have effectively been made available. A set of appropriate terms and conditions will also help to avoid conflicts and prevent you from having to negotiate about standard provisions every time you sign a contract. The advantage for you, as a business owner, is that a large number of contractual provisions will be the same for every contract you sign. Read on to find out more about the benefits that come with using general terms and conditions.
Limitation of liability
Suppose you run an IT company and your Dutch branch supplies an ERP system to a number of customers. An error in performing an update is causing the system to be down for two days. Your customers lose revenue because the downtime has a huge effect on their operations. If your services are not governed by general terms and conditions, you will be required to compensate them for all their losses. You can limit your liability in your general terms and conditions, for instance by stipulating that the losses will be compensated for up to twice the billed amount for the assignment or for up to the amount of your liability insurance payment.
Please note: you cannot exclude all liability. You will always have to compensate the customer for direct losses. Liability for losses caused by intent or wilful recklessness cannot be excluded in general terms and conditions either; you can, however, partially exclude liability for indirect or consequential losses. In the above example, for instance, you would not have to compensate for lost revenue.
That said, things are not always as simple as they seem. There are many provisions that, if included in general terms and conditions, a court will rule to be unreasonable and that are not permitted to be imposed upon individuals or small businesses. That is why we recommend having a legal expert check your general terms and conditions to prevent unexpected surprises.
Same provisions every time
Using general terms and conditions saves time because you do not have to negotiate about aspects such as liability, delivery period, payment terms, warranties, intellectual property rights, retention of title, etc. every time you sign a contract.
Retention of title
Retention of title can play an important role in general terms and conditions. If you retain the title to a product you have sold or supplied, it remains your property as long as the customer has not paid for it. If the customer becomes insolvent before having sold the product you supplied, you can claim it as your property, provided that the product is properly traceable and has not been integrated into other items of the customer.
General terms and conditions require customisation
Your general terms and conditions must be tailored to your business practices, whether you do business in the Netherlands alone or go cross-border. The general terms and conditions of an international construction company are different from those of an IT company operating internationally. That is why it is not advisable to look at the general terms and conditions of other companies and copy-paste them together to create your own.
Please do not hesitate to contact one of our legal experts if you are in need of a proper set of general terms and conditions that are tailored to your cross-border business. You can use the contact form below or send an email to firstname.lastname@example.org. Together we can help you grow your business, with a focus on the future.
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