What are the rules on pre-contractual negotiations under Dutch law?

Dutch term: Precontractuele onderhandelingen | Legal basis: Case law (HR Plas/Valburg) + 6:248 BW

Dutch law imposes a duty of good faith on parties engaged in negotiations towards a contract. The Dutch Supreme Court's Plas/Valburg doctrine (HR 18 June 1982) establishes that as negotiations advance, the parties' freedom to walk away diminishes. In the early stages, parties can withdraw freely. In the middle stage, withdrawal may trigger liability for the other party's costs. In the final stage, withdrawal may trigger liability for lost profits.

The practical consequences are significant for international business negotiations. Letters of intent, term sheets, draft exchanges and even detailed email correspondence can create legitimate expectations that a contract will follow. Breaking off at a late stage without a reasonable justification can be costly. The test is whether, in the circumstances, the other party was reasonably entitled to expect that a contract would be concluded, and whether the breaking-off party acted in accordance with the standards of reasonableness and fairness.

Why it matters for international businesses

For foreign businesses used to common-law freedom to walk away from negotiations at any time, Dutch pre-contractual good faith is one of the most important differences to understand. MAAK Advocaten advises on managing pre-contractual risk at every stage of the deal.