Reasonableness and fairness - under Dutch law

Under Dutch contract law, the principles of reasonableness and fairness have overriding effect.

Article 6:2 of the Dutch Civil Code provides that parties to an obligation should behave according to what is reasonable and fair. Furthermore, this article states that a rule binding upon such party by virtue of law, usage or a legal act does not apply in so far as this would be unacceptable according to the standards of reasonableness and fairness, given the circumstances:

1. The creditor and debtor must behave themselves towards each other in accordance with the standards of reasonableness and fairness.
2. A rule in force between a creditor and his debtor by virtue of law, common practice or a legal act does not apply as far as this would be unacceptable by standards of reasonableness and fairness.

The principles of reasonableness and fairness have a number of functions in Dutch contract law.

The first being that all contracts must be interpreted in line with these principles.

Secondly, the principles of reasonableness and fairness also have a supplementing function, in the sense that supplementary rights and duties, not expressly agreed to by parties, may nevertheless arise between parties as a result of this.

Article 6:248 of the Dutch Civil Code provides that contracts not only have the effects expressly agreed upon, but also those which, according to the nature of the contract, results from the law, usage or the requirements of reasonableness and fairness:

1. An agreement not only has the legal effects which parties have agreed upon, but also those which, to the nature of the agreement, arise from law, usage (common practice) or the standards of reasonableness and fairness.
2. A rule which is to be observed by parties as a result of their agreement, is not applicable insofar this would be unacceptable to standards of reasonableness and fairness.

The third function in Dutch contract law of the principles of reasonableness and fairness is derogating or restrictive.

Under Dutch civil law even expressed terms of a contract can be set aside when its enforcement would be grossly unjust under the present circumstances. The usage of the word "unacceptable" is an indication that the decision to set aside a contractual term on this ground, should be reserved for truly exceptional situations. The provision of article 6:248 of the Dutch Civil Code pertains to all rules binding upon parties as a result of a contract. Therefore, this provision is not only reserved for terms stipulated by the contract parties, but also pertain to terms implied by statute (both suppletive and mandatory). The principles of reasonableness and fairness could in some cases provide for the discharge of debtors in cases of impossibility of performance.

Good faith in Dutch contract law

In Dutch contract law, "acting in good faith" refers to the observance of reasonable commercial standards of fair dealing (i.e. acting in accordance with reasonableness and fairness). The test of reasonableness and fairness is not a subjective criterium, but a purely objective one. The objective aspect of this test is (also) laid down in article 3:11 of the Dutch Civil Code, which provides that good faith not only requires that a party did not know the relevant aspects of the case, but also that this party ought not have known it. The implication of this is that this party may be under a duty to investigate:

A person has not acted in good faith as a condition for a certain legal effect if he knew or in the circumstances reasonably ought to have known the facts or rights from which his good faith depends. The impossibility to conduct an inquiry does not prevent that a person, who had good reason to doubt, to be regarded as someone who ought to have known the relevant facts or rights.

Article 3:12 of the Dutch Civil Code provides that (in determining what the principles of reasonableness and fairness demand in a specific situation) one has to take into account the general accepted legal principles, the fundamental conceptions of Dutch law and the relevant social and personal interests which are involved in the given situation.

Reasonableness and fairness and unforeseen circumstances in Dutch contract law

Unforeseen circumstances could well create difficulties in the performance of contractual obligations. In case of unforeseen circumstances article 6:258 of the Dutch Civil Code provides for the possibility of modification or setting aside of the contract when this is required by the standards of reasonableness and fairness. These standards form the basis of (other) Dutch statutory provisions pertaining to contractual obligations.

If and when a party seeks modification of a contract because of unforeseen circumstances, this does not preclude the application of article 6:248 of the Dutch Civil Code.

However, invoking article 6:248 of the Dutch Civil Code (application of reasonableness and fairness) may have different effects than application of article 6:258 of the Dutch Civil Code (derogation because of unforeseen circumstances).