What is pre-contractual liability under Dutch law?

Dutch term: Precontractuele aansprakelijkheid / afgebroken onderhandelingen | Legal basis: Dutch Supreme Court case law (Plas/Valburg, HR 18 June 1982); article 6:248 of the Dutch Civil Code

Under Dutch law, parties in advanced negotiations owe each other a duty of good faith. Breaking off negotiations at a late stage without proper justification can trigger liability for the other party's reliance costs or, in some cases, for lost profits. This principle, developed in the landmark Dutch Supreme Court case Plas/Valburg (HR 18 June 1982) and refined in subsequent case law, is one of the areas where Dutch law diverges most sharply from common-law systems.

The doctrine recognises three phases in negotiations. In the first phase, parties are free to walk away without consequence. In the second phase, a duty of good faith arises and breaking off may trigger liability for the other side's costs. In the third phase, the negotiations have advanced to a point where the other party was reasonably entitled to expect that a contract would be concluded, and breaking off may trigger liability not only for costs but also for lost profits.

The boundaries between the phases depend on the circumstances: the duration and intensity of the negotiations, the extent to which the parties have relied on each other's commitments, the specificity of the terms discussed, and whether one party caused the other to incur costs in reasonable anticipation of a deal.

Why it matters for international businesses

Foreign businesses used to the common-law freedom to walk away from negotiations at any time should be aware that Dutch law imposes real constraints once negotiations become advanced. Letters of intent, term sheets and draft exchanges all carry legal weight. See our Dutch contract law guide or contact us for advice on managing pre-contractual risk.