Small but without limits


Extrajudicial dissolution

Extrajudicial dissolution

Problem: My co-contractor (eg contractor) does not or incorrectly performs his contractual obligations. What action options do I have?

If no explicit clause was included in the agreement (as a rule this will not be the case) that indicates a number of circumstances under which you can have the building contract dissolved at the expense of the contractor, a contracting party that is confronted with a co-contractor who does not accept the agreement , or does not perform properly,  can always invoke Article 1184 of the Civil Code, which provides for the dissolution of agreements.

Previously it was only accepted that a dissolution could only be pronounced by the judge. After all, the dissolution is a far-reaching contractual sanction.

However, this has the disadvantage that such a procedure can take a long time. During that period you risk being 'blocked' and not being able to finish your site further.

To avoid having to wait for a long time for a court decision, an alternative is to consider the agreement itself to be dissolved in certain cases, even if there is no expressly resolutive clause in your agreement.

In practice, this is called the so-called 'extrajudicial dissolution' of the agreement. This implies that a contracting party can invoke the dissolution on its own initiative.

A contracting party that is confronted with errors on the part of its contracting partner does not necessarily have to immediately go to court to terminate this contract.

This principle was recognized by the Supreme Court in a judgment of 16 February 2009 in which the Court confirms that a contracting party may decide at its own risk “not to perform its obligations” and may notify the contracting partner of the termination of the contract.

However, a number of conditions remain attached. For example, there must be (1) a breach of contract that justified a judicial dissolution; (2) prior intervention by the court must have become meaningless or devoid of purpose; (3) in a notice to the debtor, the creditor must disclose his notice of dissolution and the motive for dissolution in advance; (4) and the actual termination decision must be preceded by a final notice of default (unless it had become useless).

By way of example, a registered letter must be sent to the contractor with a list of the defects and whereby the contractor concerned is offered a final period to repair the defects, otherwise the agreement will be considered dissolved. In addition, repair or execution must also be urgent, so that one cannot wait for judicial intervention.

After the expiry of the ultimate term, you can consider the agreement dissolved and have the work carried out by another contractor. The Court of Cassation has ruled by judgment of 24.5.2018 (RW.2018-19, page 1101) that this unilateral termination can even take place without form (so not even by registered letter). Obviously, it’s best to do this when possible because the expression of termination must be clear and unambiguous.

However, it should be emphasized that the party initiating the extrajudicial dissolution also takes a risk. After all, if he terminates the agreement without the legal conditions being met, he runs the risk that a judge would rule that he has wrongly terminated the agreement and thereby committed a breach of contract, on the basis of which the agreement is terminated to his disadvantage.

It is therefore highly advisable to make use of this option only if the contractor's breach of contract is manifest. After all, he has to prove it. In practice it will be good, once it has been established that there are problems with taking pictures, e-mails and, in case of repeated ignorance, even sending registered letters.