Aspects of Dutch Law

Contract law

Company law
By Frater Paul Damen

Official data:

Wilhelmus M.P.J. Damen

Master in Dutch Law

Graduate from the university of Leiden, The Netherlands

In daily life, people call me Paul. That is also the name I have in the
Congregation.
Two hours

Lecture:
-Short introduction about the Civil Code
-Contract law
-Company law

Questions
Dutch Civil Code (1)

1789: French Revolution. It was the Age of Enlightenment.

People wanted transparency. The law had to be written down so that everybody
could read it.
In France: Code Civil = Civil Code.

1795: France occupies The Netherlands.

French legislation in The Netherlands.
1815: Battle of Waterloo. Napoleon defeated. The Netherlands are independent
again.
The French Civil Code remains in effect.
Dutch Civil Code (2)

1838: First Dutch Civil Code.

Name: Burgerlijk Wetboek.
It was based on the French Civil Code. There were no big changes.

Since 1970: new Civil Code.

In the 1970s: the part about natural persons and legal persons.
In 1992: the part about property, contracts and liability.
Name: Burgerlijk Wetboek.
Contract law

Contract law is part of:

the law of obligations.

What is an obligation?
Example: purchase agreement.
The person who sells an object, has to deliver it. That is an obligation.
The one who buys, has to pay the price. That is another obligation.

In Dutch language, such an obligation is called: Verbintenis.

Sources of obligations

How do obligations come into being?

1) From a contract, like the example of a purchase contract.

2) Directly from the law. Example: you have to pay tax.

Another example: if you cause a traffic accident, you have to pay for the
damage.

Now, we will concentrate on contracts only.

Open system of contracts

Dutch law has an ‘open system’ of contracts.

What does this mean?

You can create all kinds of contracts.
It is not necessary that you choose one of the kinds of contracts that
are mentioned in the Civil Code.

We call this ‘freedom of contract’.

Contracts mentioned in Civil Code

Contracts like purchase, rent, labour have their own regulation in the
Civil Code.
These regulations apply, but you are free to make other regulations in
your own contract. This is also ‘freedom of contract’.

But this freedom is limited by law.

Protection for ‘weak parties’
The ‘freedom of contract’ has its limitations.
In the Dutch Civil Code, you find rules that protect so-called ‘weak
parties’, such as the employee, the tenant who rents a house and the
peasant who rents a farm with the land around it.

These rules are dominant. They cannot be changed in a contract.

Examples.
Protection for consumers
There are also some rules in the Dutch Civil Code that protect
consumers. You find them in the regulation of the purchase contract.

They are prescribed by the European Commission in Brussels. Every

member state of the European Union (there are 27) has to integrate
certain rules for consumer protection in its national law.
There is no European Civil Code that directly applies in all member
states.

Examples of rules that protect the consumer.

Decisions of the High Council (Hoge Raad)
Decisions of the High Council (Hoge Raad in Dutch) interpreting Dutch
law, are also important.

Example.
The Civil Code says: every contract has to be executed according to
good faith, that is in a fair way.
In Dutch words: in the old Civil Code it says goede trouw (‘good faith’),
in the new Civil Code, it says redelijkheid en billijkheid (‘fairness’).

Decision by the High Council how to interpret this.

Law about legal persons

Company law is part of the law about legal persons.

It is in the Civil Code.

We discern natural persons and legal persons.

Dutch law contains a limited number of legal persons.

If you want to create one, you have to choose one of these.
Legal persons in Dutch law
In the Dutch Civil Code, you will find:
private company (besloten vennootschap)
company limited (naamloze vennootschap)
foundation (Yayasan, in Dutch we say: Stichting)
association (vereniging)
religious entities, like a parish or a congregation.

Apart from these, there also public legal persons, like the State, the
Province, the City.
Company

Example: you want to start a company.

The purpose is to gain money, to realize profit.

You can only choose:

private company, or
company limited.

Main difference between them: the way of transferring the shares.

Company rules by the European Union

The European Union has made a lot of rules about companies.

The member states (27) have to integrate them in their national laws.

In Dutch law, this is done in the Civil Code.

For instance: private companies exist in Dutch law since 29th June
1971. The European Union prescribed this. Before that date, there were
no private companies in The Netherlands.
Company law: examples

What kind of rules does the European Union make for companies?

1) Rules that protect the creditors.

Examples: minimum capital; publication of annual reports.

2)Rules against money laundering. These rules are not in the Civil Code.
Examples.
Purpose of these rules: create transparency about the persons who
really have the power in a company.
Company in other legal persons

A company can be under another legal person than privaty company or

company limited.
But then, the purpose should not be: gaining profit, gaining money. It is only
secondary.

Examples.
A Yayasan (Foundation) can exploit a hospital or a school. Then the purpose
should be: medical assistance / education. Not profit. But the Yayasan is
allowed to make profit. Otherwise, it would go bankrupt.

Also, a City can exploit a company for the benefit of all.

Questions. Remarks

You can write down your question or remark and give it to me.

Or you can ask your question in public here in this room.

Feel welcome to do this!