What is abuse of circumstances (misbruik van omstandigheden) under Dutch law?

Dutch term: Misbruik van omstandigheden | Legal basis: Article 3:44(4) BW

Abuse of circumstances (misbruik van omstandigheden) under article 3:44(4) of the Dutch Civil Code is a ground for annulment of a contract where one party exploited the other's state of dependency, emergency, recklessness, abnormal mental state or inexperience to obtain an agreement that the other party would not have entered into under normal circumstances.

The test is whether the exploiting party knew or should have known of the other party's vulnerable position and should have refrained from entering into the contract. Annulment must be invoked within three years of the moment the influence ceased. The claim can be combined with a damages claim in tort.

Why it matters for international businesses

In commercial practice, abuse of circumstances is most commonly invoked in distressed-sale transactions and in situations where one party had significantly greater bargaining power and expertise than the other.