A brief look at the new Book 7 of the Civil Code

Detriment in the sale of real estate (Article 7.2.6 of the Dutch Civil Code)

The prejudicial nature of the sale of real estate will not be abolished, but the rules will be amended.

First, the threshold for prejudicial consideration will be simplified from 7/12ths to 60%, providing additional protection for the seller of a property.

Second, the assessment date will shift to the moment of consensus rather than the actual completion of the purchase.

Finally, the procedure will be simplified by allowing the appointment of a single expert instead of a panel of three experts.

Transfer of ownership no longer results in transfer of risk (Article 7.2.18, Section 1 of the Dutch Civil Code):

The legislator notes that, in practice, when selling real estate, a clause is often included in the private purchase contract stipulating that the transfer of ownership is postponed until the execution of the notarial deed.

To avoid the need to include such a clause in contracts, the legislator has stipulated in Article 7.2.18, Section 1, that ownership in the sale of real estate only transfers upon the execution of the notarial deed.

This also affects the transfer of risk, which will henceforth only transfer upon the execution of the notarial deed, unless the seller has previously granted the buyer the use and enjoyment of the property or otherwise agreed.

Sale of another person's property (Article 7.2.18, Section 2 of the Dutch Civil Code)

Under the old Civil Code, the sale of another person's property was null and void. In the new Book 7, the sanction of nullity is excluded and can only be sanctioned by the indemnity against foreclosure. Nevertheless, the buyer can still invoke other grounds for nullity, such as fraud or abuse of circumstances.

No more distinction between hidden and visible defects, but a unified concept of conformity (Article 7.2.30 of the Dutch Civil Code)

This means that the seller must deliver the goods in conformity. In other words, the goods must correspond to what was agreed in the contract and what the buyer could reasonably expect.

Consequently, the seller will only be liable for defects that were present at the time of delivery, regardless of whether the seller could have been aware of them or whether the defects only became apparent later. The presumption of prior right no longer applies here. The seller is not liable for defects that arise after delivery, but the burden of proof still rests with the seller (Article 7.2.31 of the Dutch Civil Code).

The presumption of prior right still applies to consumer goods, pets, and contracts for the supply of digital products.

In addition, it also still applies in a B2C relationship (mandatory law): a rebuttable presumption of non-conformity in the event of a defect within two years of delivery (Article 7.2.47 of the Dutch Civil Code).

However, the presumption of bad faith on the part of a manufacturer/specialist seller will be abolished.

Three new deadlines to consider when claiming a guarantee for conformity:

In the old Civil Code, the defect had to be reported within a short period after discovery.

1. Warranty period: While there was previously no time limit within which a seller could be held liable for latent defects, this is no longer the case in Book 7. Only defects that become apparent within 10 years of delivery of the goods lead to seller liability (Article 7.2.32 of the Dutch Civil Code), and therefore no longer a short period "after discovery."

    

2. Notification period: The "short period" is also replaced by a reasonable period after discovery of the defect (Article 7.2.33 of the Dutch Civil Code). The reasonable period depends on the circumstances and, in particular, the nature of the goods, the nature of the defect, the customs, and the capacity of the parties. For consumer purchases, this period is at least two months (Article 7.2.51 of the Dutch Civil Code).

    

3. Limitation period: The claim for a lack of conformity will in any case expire after two years from the date the seller was notified of the defect, regardless of the B2B, C2C, or B2C relationship (Article 7.2.34 of the Dutch Civil Code). However, as in the old Civil Code, the period can be suspended during sufficiently serious negotiations between the parties or during judicial or adversarial extrajudicial expert investigation.

Sanctions Regulation (Article 7.2.35 of the Dutch Civil Code):

Remedies such as repair, replacement, termination, and price reduction remain in place (Article 7.2.35 of the Dutch Civil Code).

What will change is that reversing the purchase or reclaiming the purchase price will no longer be possible if repair is possible and reasonable.

Codification of precarious occupation:

Where there was previously no legal provision regarding occupation for the purpose of begging, this will be changed in the new Book 7. The law will expressly state that this is a contract in which one party undertakes to grant another party the precarious use and enjoyment of a property for a price that is not a rental fee, insofar as the precarious nature of the contract is justified by legitimate reasons.

Limitation period in case of undue prescription (Article 7.3.20 of the Dutch Civil Code):

The double limitation period in Article 1728quater is replaced by a five-year limitation period. In addition, the requirement to send a registered letter is removed.

Design-related development or alteration works (Article 7.3.21 of the Dutch Civil Code):

The new Code will allow for the execution of zoning-compliant furnishing or alteration work that can be removed without damage, without the landlord's permission. This work must be removed at the end of the lease, unless the landlord chooses to retain it.

The common law regime for service contracts:

The old Civil Code only provided a framework for "hiring of work" or contracting. The new Book 7 will now also include authorization and safekeeping.

Duty of cooperation between client and contractor (Article 7.4.5 of the Dutch Civil Code) and duty of coordination in the case of multiple contractors (Article 7.4.10 of the Dutch Civil Code):

In Article 7.4.5, the legislator stipulates that the client must provide the contractor with the necessary instructions, information, permits, and authorizations that may reasonably be expected from the client and that are necessary for the execution of the assignment.

Conversely, the contractor must provide the client with all relevant information regarding the execution of the assignment that the client may reasonably expect. The contractor must enable the client to verify that the assignment is being performed in accordance with the contract. The contractor must follow the client's instructions as referred to in the second paragraph, unless these instructions are inappropriate or manifestly unreasonable. In that case, the contractor may refuse to perform the assignment or, if it agrees to the performance, make a reservation in advance. Failure to comply with the obligation to cooperate as described above will be sanctioned in accordance with Article 5.83 of the Dutch Civil Code.

If multiple contractors are involved, each of whom is bound to the client by a separate contract, a coordination obligation will be included. The client may undertake this itself or instruct one of the contractors. If this task is transferred and not carried out properly and the other contractors suffer damage as a result, they can hold the client liable.

Unknown circumstances (sujétions imprévues) (art. 7.4.8 BW):

The doctrine of unknown circumstances was already applied to construction contracts, but its scope is extended in the new Book 7 to all service contracts.

Under the old Civil Code, the contractor could, in principle, not demand any increase in the agreed price when a service contract was concluded at a fixed or lump sum price, even if the assignment required more work or expenditure than anticipated.

Book 7 addresses this by requiring renegotiations to adjust the price or full or partial termination of the contract. The following cumulative conditions must be met:

• The circumstances/difficulties already existed before the contract, but became exceptionally onerous during the contract, making further performance of the contract unreasonable.
• The circumstances/difficulties were not yet known to the contracting parties at the time of the contract's conclusion.
• The circumstances are not attributable to the contractor.
• The contractor did not assume the risk.
• This possibility was not excluded by law or by the contract.

The difference with the current doctrine of unforeseen circumstances, as included in Article 7.74 of the Dutch Civil Code, is that the doctrine of unforeseen circumstances pertains to new circumstances that arise after the conclusion of the contract. The provision on unknown circumstances, on the other hand, pertains to pre-existing circumstances that only become exceptionally onerous during the performance of the contract.

Contractor's safety obligation (Art. 7.4.12)

If the performance of the service contract entails certain risks for the client or their goods, for third parties or their goods, for the environment, etc., the contractor has a safety obligation: the contractor must take all reasonable measures to prevent the performance of the assignment from causing damage. The contractor must obtain prior information and take all reasonable precautions to prevent these risks from materializing during the performance of the assignment.

For example, before performing an operation, a physician must inform themselves about any prior conditions the patient may have that could affect the operation and then tailor their treatment plan accordingly.

Direct action of the auxiliary person against the principal (7.4.31 BW):

With this article, the legislator clarifies that the principle whereby an auxiliary person has a direct claim against the client whenever the contractor fails to pay the auxiliary person (as already contained in the old Civil Code) applies not only to the construction sector, but also to other service contracts. In other words, a new wording has been introduced to provide clarification.

Provisional and final acceptance (art. 7.4.48):

In practice, double delivery was often used. This is now also enshrined in Article 7.4.48 of the Dutch Civil Code. This is a supplementary law rule. For residential construction contracts, double delivery remains the rule.

The provisions of Book 7 of the Civil Code apply to all legal acts and facts that occurred after the entry into force of this Act.

Unless the parties have agreed otherwise, these provisions do not apply, and the previous rules remain applicable:

1. to the future consequences of legal acts and facts that occurred before the entry into force of this Act;
2. notwithstanding the first paragraph, to legal acts and facts that occurred after the entry into force of this Act and that relate to an obligation arising from a legal act or fact that occurred before the entry into force of this Act.