Joint liability and several liability in the Netherlands
If two or more parties undertake to perform the same obligation, under Dutch law these parties will be bound for equal parts of such obligation (unless they must be considered by law, custom or contract to be bound for equal parts or each for the whole of the obligation). Article 6:6 of the Dutch Civil Code (Burgerlijk Wetboek) provides:
1. If a performance is indebted by two or more debtors jointly, then each of them is liable for an equal part, unless it would result from law, common practice or a juridical act that they are liable for unequal parts or that they are jointly and severally liable.
2. If the performance is undividable, or if it would result from law, common practice or a legal act that the debtors each are liable for the whole debt, then they are jointly and severally liable.
3. It may result from an agreement between the debtor and creditor that, when the obligation passes to two or more legal successors of the debtor, these successors are liable for unequal parts or that they are jointly and severally liable.
If two (or more) parties are bound for the whole of the obligation, they are jointly liable co-debtors (hoofdelijke aansprakelijkheid), who are required by law to act towards each other in accordance with the standards of reasonableness and fairness.
Suretyship as joint liability in the Netherlands
Under Dutch law, suretyship is a form of joint liability, since the surety has undertaken to perform the same obligation as the principal debtor.
Not every form of joint liability is a suretyship under Dutch law. Joint liability can only be regarded as a suretyship if and when the person assuming the liability does so for a debt that does not regard him as such, and therefore it is apparent that he only intends to act in order to provide security to the creditor.
How does a guarantee differ from suretyship under Dutch law?
Under Dutch law, a guarantee and a suretyship are related but distinct concepts. A guarantee in the international commercial sense imposes a primary, independent payment obligation on the guarantor, whereas suretyship remains accessory and subsidiary to the principal debt.
Dutch practitioners increasingly encounter the English-law concept of a "guarantee" in cross-border transactions. Under English law, a guarantee is a three-party arrangement whereby a surety undertakes either to discharge a debt owed by the principal debtor if that debtor defaults, or to ensure that the principal debtor complies with its obligations. The surety's liability is therefore secondary: it arises only when the principal debtor fails. English law further requires that a guarantee be recorded in writing, a formality rooted in the Statute of Frauds of 1677.
This secondary character closely resembles Dutch suretyship (borgtocht). However, in international commercial contracts governed by Dutch law, parties sometimes label an arrangement a "guarantee" when they in fact intend an independent, primary payment obligation. Dutch courts assess the true nature of such an arrangement by examining the reasonable meaning the parties could attach to their agreement, taking account of all surrounding circumstances. The label alone is not decisive.
Jointly liable co-debtor in the Netherlands
If a surety has bound himself as surety and jointly liable debtor, this generally means that the surety has waived his right to invoke the subordination of his liability towards the creditor. This is often the case when a parent company binds itself as a jointly liable co-debtor.
What is an indemnity, and how does it work in Dutch commercial practice?
An indemnity is a contractual indemnification clause under which one party agrees to compensate the other for a specific, foreseeable risk or loss on a euro-for-euro basis, independently of the general rules on damages.
In cross-border share purchase agreements and other commercial transactions governed by or influenced by English law, indemnity clauses appear alongside warranty provisions. The practical difference matters considerably. An indemnity addresses known, foreseeable risks: the seller of shares in a legal entity, for example, may agree to indemnify the buyer if a specific tax liability materialises after closing. A warranty, by contrast, typically covers unknown or unforeseeable risks that existed at the moment the contract was signed.
Because an indemnity contractually shifts risk in a direct and often far-reaching way, English courts interpret indemnity clauses very strictly. Dutch courts take a comparable approach when applying Dutch law to indemnity provisions: a clause that departs substantially from the default rules on damages requires clear wording before a court will give it full effect.
A further distinction worth noting concerns the legal character of the indemnity claim itself. Under English law, an indemnity may qualify either as a "claim in debt" or as a "damages claim," depending on its precise wording. Where an indemnity qualifies as a debt claim, the creditor need only prove that the triggering event occurred; proof of actual loss, the rules on remoteness of damage, and the duty to limit losses do not apply. Where the indemnity amounts to a damages claim, those rules do apply. Dutch law does not draw exactly the same distinction, but the underlying policy question is similar: parties drafting indemnity clauses in Dutch-law contracts should specify with precision whether a fixed or determinable sum is payable upon a defined event, or whether compensation depends on the actual loss suffered.
How do condition and warranty concepts compare with Dutch contract law?
English law distinguishes sharply between a "condition," whose breach entitles the innocent party to treat the contract as terminated, and a "warranty," whose breach gives rise only to a damages claim. Dutch law does not follow this binary classification.
Under English law, whether a contractual term ranks as a condition or a warranty is determined by statute, by express party agreement, or by judicial interpretation. A condition is a term so fundamental that even a minor breach entitles the creditor to treat the contract as repudiated. A warranty, in contrast, sounds only in damages; no right to terminate arises. Dutch legal doctrine holds that this apparently formalistic approach serves two legitimate purposes: it respects party autonomy in assigning relative weight to contractual obligations, and it promotes legal certainty by resolving the consequences of a breach in advance rather than after the fact.
Dutch law does not mirror this binary structure. Under the Dutch Civil Code, the right to dissolve a contract generally requires a failure in performance that, given its nature or minor significance, justifies dissolution. Courts in the Netherlands therefore conduct a proportionality assessment at the time of the dispute. Parties drafting contracts under Dutch law who wish to replicate the certainty of the English condition-warranty distinction should therefore include explicit dissolution clauses, specifying which obligations are of such importance that any breach, however slight, justifies termination.
Furthermore, English law distinguishes the "condition" as a contractual term from a "condition precedent" (a suspensive condition) and a "condition subsequent" (a resolutive condition). Dutch law uses comparable concepts in Article 3:38 of the Dutch Civil Code, which permits parties to attach suspensive or resolutive conditions to juridical acts. International practitioners should therefore take care not to assume that identical terminology carries identical legal consequences across these two systems.
Why does good faith operate differently under Dutch and English law in commercial contracts?
Dutch law applies the standards of reasonableness and fairness broadly, including during contract performance and in the pre-contractual phase. English law rejects any general duty of good faith and relies instead on specific, targeted doctrines.
Article 6:2 of the Dutch Civil Code establishes that creditors and debtors must act toward each other in accordance with the standards of reasonableness and fairness. This norm applies throughout the life of a contractual relationship: before the contract is formed, during its performance, and at the point of termination. Dutch courts regularly use this standard to supplement or correct contractual arrangements where strict application would produce an unacceptable result.
English law takes a fundamentally different position. No general overriding principle of good faith governs English contract law. English courts have repeatedly confirmed that each negotiating party is entitled to pursue its own interests, provided it avoids misrepresentation. Accordingly, there is no duty under English law to negotiate in good faith, and a clause purporting to impose such a duty is generally regarded as unenforceable on the ground that it lacks sufficient certainty.
In recent years, some English courts have shown greater willingness to recognise implied duties of good faith in long-term "relational contracts," where ongoing cooperation is central to the agreement's commercial purpose. However, this development remains limited and contested. Leading Dutch commentators take the view that even this cautious English trend falls well short of the broad reasonableness-and-fairness standard that Dutch law applies as a matter of course. Parties choosing Dutch law as the governing law of a long-term commercial relationship therefore benefit from a more flexible corrective mechanism when unexpected circumstances arise.