Contract for services

Dutch law recognises the principle of freedom of contract, meaning that parties can agree on whatever they want, in whatever form they want. As long as it is not illegal or contrary to public morality.

However, because there is a social need for regulation, specific rules for contracts are also included in the law, known as special contracts, one of which is the contract for services.

Other contracts that, like the contract for services, involve the performance of work but which, according to the law, do not fall under the rules of the contract for services are:

• Employment contracts;
• Contracts for work (the creation of a “work of a material nature”);
• Custody agreements;
• Agreements for the publication of works;
• Transport agreements.

The contract for services is mainly regulated by law for cases where the contractor and client have not agreed on anything. If they have agreed on something, then that applies.

The best known of the above special contracts is the employment contract, which, as is well known, is subject to many rules, but in the context of the flexibilisation of the labour market, there has been a strong growth in recent years in the number of self-employed persons without personnel, also known as zzp’ers. The zzp’er works on the basis of a so-called contract for services.

Obligations of the contractor

The contract for services is an agreement whereby the contractor accepts an assignment from the client. That assignment must involve the performance of work.

The contractor must perform his work as a good contractor. He may not, therefore, “take it easy”. He must also perform the assignment himself, unless it is clear from the assignment that he may have it performed by others.

The contractor must also follow the client’s instructions in a timely and responsible manner. If the client gives unreasonable instructions and refuses to deviate from them, the contractor may terminate the contract for services (more on this later).

While working on the assignment, the contractor must keep the client informed of his activities and must notify the client as soon as he has completed his assignment (unless the client is already aware of this, of course). He must also indicate how he has carried out the assignment. If he has spent or received money on behalf of the client, he must indicate how much this was.

If several persons have jointly received a contract for services from a client, they are in principle each individually liable for the entire contract, unless the shortcoming in question cannot be attributed to either of them.

Obligations of the client

The client is obliged to pay the contractor’s wages if he enters into the contract for services on a commercial basis. If the amount of those wages has not been agreed, they will be calculated in the usual manner. If there is no usual way of calculating the wages, a reasonable wage will be paid.

If the expenses incurred by the contractor are not already included in the remuneration (this must then be stated in the contract for services), the client is obliged to reimburse the contractor for these expenses.

If the contractor suffers damage as a result of a particular risk associated with the contract during the performance of the contract and the realisation of the risk cannot be attributed to him, the client must pay for that damage. If the contractor had concluded the contract for services as an entrepreneur, this only applies if the risk is not one of the normal risks associated with that profession or business. Even if the contractor did not enter into the contract for services in his profession or business, but he does receive wages and the risk is taken into account, the client is not liable.

If there is a client who has given the assignment together with another person, both are jointly and severally liable (each for the whole) to the contractor.

Terminating a contract for services

The client may terminate a contract for services at any time. Case law has determined that, based on the principles of reasonableness and fairness, this is not always possible at any time. A professional client may have to pay compensation, depending on the circumstances of the case. A private client is never required to do so, and it is not possible to deviate from this in the contract.

The professional contractor may only terminate the contract for services if he has compelling reasons (such as not wanting to comply with unreasonable demands imposed on him by the client) or if the contract for services is for an indefinite period and does not come to an end upon completion.

If the contract for services is terminated prematurely, the contractor is entitled to remuneration and the client will, of course, have to pay this. If remuneration was only agreed for the completion of the entire contract, a reasonable remuneration will be determined (based on the work already performed, the benefit to the client and the manner in which the contract was terminated).

What happens if a contract is terminated without valid reason?

If a contract is terminated without valid reason, this can have serious legal consequences. Terminating a contract without good reason and without giving reasonable notice can lead to liability for damages. The aggrieved party may, for example, claim lost profits or investment costs. Sometimes, the reopening of the collaboration is even demanded if the termination is contrary to reasonableness and fairness.

Do you want to terminate an agreement? Avoid costly legal proceedings and damage to your reputation by seeking legal advice.

What is the difference between a Letter of Intent (LOI) and a final agreement?

A Letter of Intent (LOI) is a declaration of intent. In it, the parties agree that they want to collaborate or negotiate a particular transaction, without being fully legally bound. An LOI often contains agreements about the negotiation procedure, confidentiality and exclusivity, but often leaves room to ultimately decide not to proceed with the deal. A final agreement, on the other hand, sets out the agreements in a binding manner. The parties are then obliged to deliver or perform as agreed, on pain of liability for non-performance.

Points to consider in a contract for services

There are two main points to consider in a contract for services:

Do not misuse the contract for services as an alternative employment contract. Misuse may result in the contract still being considered an employment contract, which means that all the rules of the employment contract will also apply. Among other things, the minimum wage (or collective agreement wage) will have to be paid and holiday pay will have to be paid.

Most of the regulations governing the contract for services concern so-called “regulatory law”, which means that deviations from it are possible. For example, it may be interesting to deprive the client who is an entrepreneur of the right to terminate the contract at any time (or to link a notice period to it). This is not possible for private individuals.

Contract for services – Conclusion

The contract for services is a special contract with a number of specific rules in the law that govern the obligations of the client and the contractor and regulate how the contract for services is terminated.

Given the specific nature of the contract for services, it is advisable to contact a specialised solicitor at Fruytier Lawyers in Business for assistance in drafting it or for questions and conflicts regarding it.

Author: Employment law solicitors Mignon de Vries.