In its judgement of 21 October 2013 the Court of Appeal in Amsterdam pointed out that a contract cannot be terminated (ontbinden<\/i>) without explicitly serving the other party prior notice of default and setting a final deadline for remedying the shortcoming. \u201cGo Live\u201d is not considered a final deadline, especially not if the PID refers to \u2018planned\u2019 and \u2018expected\u2019 in this context.<\/p>\n\n\n\n
Tycobuiding Services B.V. and InterAccess signed a contract on the implementation of an SAP system. The contract \u2013 in English \u2013 provided that either party could terminate the contract if performance \u201cremained impossible\u201d (but excluding circumstances beyond that party\u2019s control). It had also been agreed that either party could terminate if the other party did \u201cnot fulfill some substantial obligations arising from the Agreement and also after written proof of default in which a reasonable time is given in which to thoroughly comply, remains liable to fulfull Party\u2019s obligations (\u2026) (sic<\/i>)\u201d. Moreover, if InterAccess \u201crepeatedly and in a continued manner fails to meet the System Availability during the terms of the Agreement and it cannot be required of Customer to continue this agreement, then the Customer (Tyco) may terminate this Agreement (..)\u201d.<\/p>\n\n\n\n
This may have been badly formulated in bad English, but all ended well for InterAccess.<\/p>\n\n\n\n
Go Live was set for 1 October 2007. This deadline was not met, as happens on a regular basis where IT projects are concerned. Even the courts seem to have noticed this: \u201cit is fact of common knowledge that automation projects may overrun\u201d <\/i>(District Court of Amsterdam, 7 April 2004). Tyco regarded the Go Live date as a final deadline and terminated the contract without serving prior notice of default and specifying a timeframe for InterAccess to remedy the shortcomings.<\/p>\n\n\n\n
The Court of Appeal focusses on the terminology in the PID (project initiation document), which refers to \u2018planned start date\u2019 and \u2018expected start 2nd<\/sup> half 2007\u2019. These phrases certainly do not indicate a final deadline. The Court points out that parties do not seem to have agreed on a final deadline when entering into the contract. Tyco tries to convince the Court that the Go Live date gradually turned into a final deadline because parties had agreed that the planning could only be changed in mutual consultation (as a PID usually stipulates) and that Go Live is seen as a final deadline in the IT branch. Tyco\u2019s expert witnesses put forward that a Go Live date gradually becomes a final deadline, which parties cannot change without agreeing on alternative measures to be taken. The Court is willing to accept this, but it does not consider this to be relevant for the question whether the Go Live date is a final deadline in the sense of the Netherlands Civil Code. If it is, this means that Tyco, before terminating the contract, should serve a notice of default including a timeframe for InterAccess to remedy any shortcomings.<\/p>\n\n\n\n Tyco also tries to convince the Court it was entitled, pursuant to the principle of reasonableness and fairness, \u00a0to terminate the contract without any prior notice of default now that the other party had defaulted. Case law allows this, provided there are sufficient circumstances to support the claim and provided these circumstances can be proven. Tyco does not meet these criteria, as becomes apparent from the Court\u2019s repeatedly using phrases such as \u201cinsufficiently clarified\u201d and \u201cinsufficiently demonstrated\u201d. Tyco argues that InterAccess failed to meet its obligations and that this was discussed more than once, but it has not explained why it would not have to serve a notice of default. Tyco has also failed to clarify why Tyco could not be expected to remedy the shortcomings (in which case a notice of default possibly needn\u2019t be served). For these reasons, Tyco can not rely on the principle of reasonableness and fairness.<\/p>\n\n\n\n It would have been interesting to see what would have happened if Tyco had actually supported its claim by proving the circumstances as required in case law. In principle late delivery is temporary non-performance: delivery remains possible, but at a later date. The Netherlands Civil Code provides that a liability claim for the consequences of non-performance can be seen as a notice of default and then no further timeframe for remedying the shortcomings is required. Unfortunately, Tyco didn\u2019t plead this option.<\/p>\n\n\n\n Tyco has invoked the contractual stipulations concerning its right to terminate the contract, but these are also rejected by the Court because they have not been substantiated. The question remains what is meant by \u2018substantial obligations\u2019 and when there is a \u2018continued manner\u2019.<\/p>\n\n\n\n The Court rules, on formal legal grounds, that InterAccess was not in default and that Tyco had no right to terminate the contract. Since the contract has not been terminated in accordance with the law, Tyco will have to continue to pay the \u20ac 27,000 monthly instalments and compensation of damages amounting to \u20ac 35,000 plus interest. Bad luck for Tyco because the question whether InterAccess breached the contract or not has no relevance whatsoever in this case.<\/p>\n","protected":false},"excerpt":{"rendered":" In its judgement of 21 October 2013 the Court of Appeal in Amsterdam pointed out that a contract cannot be terminated (ontbinden) without explicitly serving the other party prior notice of default and setting a final deadline for remedying the shortcoming. \u201cGo Live\u201d is not considered a final deadline, especially not if the PID refers […]<\/p>\n","protected":false},"author":4,"featured_media":0,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"single-post","format":"standard","meta":{"_acf_changed":false,"footnotes":""},"categories":[1034],"tags":[],"class_list":["post-2977","post","type-post","status-publish","format-standard","hentry","category-it-internet"],"acf":[],"mb":[],"yoast_head":"\n