Penalty clause struck down in court: lessons for business owners

As a business owner, you rely on clear contracts and enforceable agreements. On 30 December 2025, the judge hearing the application for interim relief at the Amsterdam District Court dismissed a claim for payment of a contractual penalty amounting to 10% of the purchase price in a property transaction. The crux of the matter: a penalty clause in the “General Terms and Conditions” is only enforceable if those terms are clearly and demonstrably part of the agreement. This ruling underlines the importance of careful contract management, proper reference to general terms and conditions, and proof of delivery, particularly in the case of digital signatures.

The case in brief

On 8 October 2025, the sellers entered into a purchase agreement for a property with a purchase price of €7,250,000. The buyer, a consumer, failed to pay the deposit and notified the sellers by email that they would not be proceeding with the purchase. The sellers terminated the agreement and claimed a contractual penalty of 10% (€725,000), based on the aforementioned general terms and conditions (“General Provisions of the KNB Deed of Sale”). The text of the purchase agreement contained only general references to the KNB provisions; a separate KNB deed of sale containing such General Provisions was not signed. Nor were these terms handed over to the buyer upon the digital signing of the purchase agreement.

Positions of the parties

• The sellers argued that the KNB General Provisions applied, including the penalty clause. They pointed to damage resulting from double charges and costs for a new sale.
• The buyer argued that the seller had taken unfair advantage of the circumstances, as there had been a lack of judgement and inexperience, meaning she was unaware of the consequences of signing the purchase agreement. Therefore, according to the buyer, the agreement was voidable. Furthermore, the penalty was said to be excessive, partly because the sellers had not demonstrated financial hardship or substantiated any loss. Consequently, the buyer requested that, should the penalty clause prove applicable, the penalty be reduced to zero

Ruling of the judge in preliminary relief proceedings

The claim in summary proceedings for payment of the 10% penalty was dismissed. The judge ruled that:

• The references to the KNB General Terms and Conditions in the purchase agreement were insufficiently specific to assume that the penalty clause had been contractually agreed.
• Furthermore, the sellers failed to demonstrate that the General Terms and Conditions had been provided at the time of (digital) signing. In the case of consumers, general terms and conditions must be provided before or at the time of concluding the agreement in order to be applicable. A mere non-specific reference in the contract without sending the general terms and conditions is not sufficient. This means that, in this case, the buyer is not bound by the general terms and conditions, as these have not been acknowledged or received.
• The buyer’s email requesting that the penalty be waived does not constitute acknowledgement: this followed only after the notice of default in which the penalty was referred to.
• There was no urgent interest: it has not been established that the sellers were in acute financial distress as a result of the non-performance, which is necessary for the granting of a monetary claim in summary proceedings.
• Proportionality: the property was eventually sold shortly before the hearing for €6,875,000, a difference of €375,000 compared to the previous purchase price. Even if a penalty clause were to apply, a substantial reduction in proceedings on the merits would be reasonable because the penalty (€725,000) is disproportionate to the (alleged) damage.

Outcome: the contractual penalty was not awarded in summary proceedings.

What does this mean for you as an entrepreneur?

For entrepreneurs in the SME sector and the property sector, the following applies: the applicability of a penalty clause is not a given. General terms and conditions must have been clearly agreed and demonstrably provided, particularly to consumers. In the case of digital contracts, verifiable delivery (for example, as an attachment or via a download link with a log) is essential. Without this proof, you run the risk that crucial provisions – such as a penalty clause – will not be valid. In addition, the court takes proportionality into account, meaning that a penalty may be moderated if it is disproportionate to the actual damage.

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Our corporate and contract law solicitors are here to assist you. We advise on both the drafting and enforcement of contracts and terms and conditions in substantive and interim relief proceedings.

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