What is nullity (nietigheid) of a contract under Dutch law?

Dutch term: Nietigheid | Legal basis: Article 3:40 BW

Nullity (nietigheid) under article 3:40 of the Dutch Civil Code means that a legal act is void from the outset, as if it never existed. A contract is null and void if it is contrary to mandatory law, public morality (goede zeden) or public policy (openbare orde). Nullity is automatic and does not require a court declaration.

Nullity is distinct from annulment (vernietiging), which applies to contracts that are valid but defective (mistake, fraud, duress). A null contract has no legal effect from the start, while an annulled contract is treated as if it never existed only from the moment of annulment. In practice, the distinction affects the restitution obligations of the parties and the position of third parties.

Why it matters for international businesses

For international businesses, nullity is most commonly encountered when a contract violates competition law, sanctions regulations, or mandatory Dutch rules that cannot be contracted around.