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Perceived differences between English and Dutch contract construction are no more than caricatures

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Amsterdam, 18 February 2022

The most popular choice of applicable law in international commercial contracts is currently English law. One of the reasons for this lies in a general perception that English contract law emphasises freedom of contract and business certainty. Dutch law, by contrast, is sometimes alleged purported to be dominated by the more nebulous concept of good faith (“reasonableness and fairness") and hence to offer lesser certainty. NCC judge Dudok van Heel and professor Tjittes (also an NCC judge sitting by designation) contend in this article (pdf, 375.4 KB) that these views are no more than caricatures.

Although English law does not contain a general doctrine of good faith, there are discernible developments towards the recognition of that doctrine (albeit limited for now to the performance phase of relational contracts). There is no duty to negotiate in good faith, but English law offers piecemeal solutions to counter unfairness in the pre-contractual phase. The interpretation of contracts is not only a matter of textual interpretation, but also of contextual interpretation in light of the matrix of facts.

The Netherlands Supreme Court has shown that it has a keen appreciation of the value that business ascribes to certainty and flexibility. Examples include its strong record in curtailing precontractual liability, the weight its landmark judgments ascribe to linguistic meaning when constructing carefully drafted commercial contracts between professional parties, and its insistence that the restrictive effect of reasonableness and fairness is a very strict standard that is to be applied with restraint.

 

Judge Dudok van Heel and Professor Tjittes



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