Book 6 Civil Code –  Increased liability risks from 2025 onwards

New legislation will come into force on 1 January 2025 that will lead to increased liability for directors, employees, subcontractors, and independent service providers (CEOs, CFOs, managers, freelancers, etc.), among others. 
 

 1. Wherein lies the danger? 

The new legislation broadens the possibilities of bringing so-called extra-contractual liability claims proceedings. 

This impacts the following situations: 

(i) the relationship between contracting parties 

  • Currently, in principle, the contracting parties can only file suit against each other on the basis of the contractual provisions if one of them is in breach of the contract. Contractors can almost never file suit against each other on ‘extra-contractual grounds’ (the ‘concurrence prohibition’).
  • Starting in 2025, the contracting parties can choose whether to initiate proceedings against one another:
    • EITHER on the basis of the contractual provisions; 
    • OR on grounds outside the contract (such as a breach of the general standard of care). 

In this case, however, the contractor will be able to rely on the existing contractual provisions to defend itself. 

(ii) the relationship between ‘principal’ clients and ‘auxiliary persons’ 

Auxiliary persons are (natural or legal) persons who assist another person (the ‘principal contractor’) in the performance of a contractual obligation entered into with a third person, i.e. the end client (the ‘principal client’). 

This may refer to subcontractors, but the following groups are also considered ‘auxiliary persons’: 

  • directors 
  • employees 
  • freelancers 
  • independent service providers 
  • etc.
    • Currently: A principal client, which has entered into a contract with a principal contractor, cannot invoke the contractual liability of the auxiliary persons whom the principal contractor has engaged. After all, there is no contractual relationship between this principal client and this auxiliary person. Moreover, the extra-contractual claims of principal clients against auxiliary persons are now almost entirely excluded, which creates a quasi-immunity. 
    • Starting in 2025, principal clients will be able to file suit against their principal contractor’s auxiliary persons directly on ‘extra-contractual grounds’. 

Specifically, directors, employees, freelancers, independent service providers/managers, etc. can be sued in culpable tort by aggrieved contractual parties of the companies for which they work. In this case, however, the auxiliary person may rely on the existing contractual provisions between them and the principal contractor, as well as between the principal client and the principal contractor, to defend themselves. 

The diagram below provides a visual overview:

Current situation

Future situation

 2. What can/must you do? 

The new legislation is ‘supplementary law’ (“Unless the law or contract stipulates otherwise, (…)”). This means that the new liability risks can be pre-emptively modulated or excluded (to some extent) in the contracts between the different parties. 

How do you approach this? 

Are you a principal client/end client, a principal contractor, or an auxiliary person assisting their co-contracting party in the performance of the principal contract with the end client?  

Maybe you hold a variety of positions? 

It is highly recommended to take action, especially if you are a director, freelancer, self-employed service provider/manager, etc. 

Depending on your position, provide best-fit clauses in your general terms and conditions and/or contracts that regulate, limit, or exclude liability between: 

  • the auxiliary person and the principal contractor; 
  • the principal contractor and the principal client. 

An increase in liability risks can be mitigated by, among other things, incorporating clauses in respective contracts as shown below: 

If the principal client does not want to be bound by the general terms and conditions of the principal contractor, it is advisable to check whether the principal client has already amended its general terms and conditions to comply with the Book 6 provisions. If not, it is appropriate to:  

  • stipulate a limitation on the liability of the principal client 
  • remove this contractually

An addendum to the contract may be considered for existing contracts.

Ensure that the professional and directors liability insurance policies taken out meet the new legal requirements and provide adequate cover for both contractual and extra-contractual liability.

PLEASE NOTE: 

Contractual liability limitations and exclusions are allowed only within the legal limits on freedom of contract. Therefore, it is recommended to consult a professional.