Despite the word “contract law”, the word “contract” is not a legal term. The average Dutch person means by a contract a piece of paper with agreements and signatures. Legally this is more nuanced. The agreements themselves are called an agreement. In most cases, this agreement is concluded orally. We usually put those agreements (commitments) on paper because we want to be able to prove those agreements and because we want the agreements to be clear to all parties. On the one hand, a contract serves as a deed (a signed document serving as evidence). On the other hand, a contract serves to indicate what the parties have agreed upon.

A contract is therefore a written collection of rights and obligations that the parties have agreed with each other. As most homeowners will know, signing a purchase contract does not make you an owner.

In the purchase agreement, the parties only make agreements about obtaining ownership. The buyer only becomes the owner when it is delivered to him. This means that you can buy the Erasmus Bridge from your neighbor (the purchase contract), but that neighbor can never give you ownership of the Erasmus Bridge (because he does not own it). Ownership is usually obtained by transfer of ownership (for example in the supermarket) or by a (notarial) deed of transfer.

Even before the parties sign a contract, agreements already apply between them, even if they do not agree. The necessary rules follow from the law, custom and “reasonableness and fairness”. A contract may not be formed as a result of threats, fraud, abuse of circumstances, or – under circumstances – by providing false information or concealing important information. We are then talking about defects of will. If this does happen, the agreement can be canceled afterwards, with all the consequences that entails. But not signing a contract can also have the necessary consequences. If you ask someone to spend a lot of time and money on making a quotation and do not make any further agreements about it, then at some point the scale will overturn and you will have to reimburse those costs. Even though there is no contract.

A contract is more than the agreements on paper. Under the law, an agreement has not only the consequences that the parties have agreed upon, but also the consequences arising from the nature of that agreement, from the law, the custom or the requirements of reasonableness and fairness. And to remove all “uncertainty”, the law also stipulates that a rule from an agreement does not apply if it would – in short – be unacceptable. At first sight this seems to offer little guidance, but on closer inspection it is different. The rules of the contract apply between the parties, unless the judge is of the opinion that this is different in view of the circumstances. You cannot always hold someone to a contractual provision, but you should also not complain if you sign a contract without first looking into it. As with any legal issue, interpreting a contract requires not only knowledge of the given rules (the law, the contract), but certainly also knowledge of the way in which these rules should be interpreted according to the courts (case law).

If the content of the contract is clear, the parties know what to do and what to expect from the other. If one party does not do what it should do, the other has several options. For example, he can ask the judge to convict the other to still perform, or to dissolve the agreement. He can also ask the judge to order the other to pay compensation.

In all cases, it must be clear that a party is not doing what it should do. In other words, the debtor must be in default of an obligation due and payable. Sometimes this can be deduced from the circumstances of the case (payment is not made within the agreed term), while at other times it is more nuanced. The other will then have to be given the opportunity to do what he is obliged to do.

In practice, a claim from one party will often be answered with a claim from the other party, even from another agreement. After all, many parties do business with each other more often.

On the one hand, compliance, on the other hand, dissolution or adjustment of the agreement. On the one hand, dissolution with damages due to fact X, on the other hand, dissolution with damages due to fact Y. An appeal to suspension on the one hand, an appeal to creditors’ default on the other.

Good advice in advance costs money, but can prevent a lot of misery afterwards. If a dispute cannot (no longer) be resolved without a judge, the thickness of the wallet often determines who ultimately wins the game. It is therefore wise to seek advice before signing a contract.