Breakdown in international contracts is an attributable failure to perform. At Musch Legal, we work daily with breakdown cases under Dutch law (Article 6:74 BW) and CISG. The legal approach differs per legal system: Dutch law requires notice of default under Article 6:82 BW; CISG provides for Nachfrist under Article 47. Incorrect application of remedies leads to counterclaims or loss of rights. Acting quickly and in a structured manner is essential.
What is the legal problem? (When does a breakdown occur?)
Breakdown arises from failure to perform an obligation, or failure to perform it in a timely or proper manner. Attribution requires that the failure can be attributed to the debtor (Article 6:75 BW). Internationally, rules regarding notice of default, reasonable time, and remedies vary. An awkward response undermines rights or causes a breakdown itself. For effective redress: early documentation, formal notice of default, structured escalation.
What does the law say? (Which frameworks apply?)
Under Dutch law, Articles 6:74-83 of the Civil Code govern breach of contract. Article 6:74 of the Civil Code: damages for attributable failure. Article 6:82 of the Civil Code: notice of default required for default. Article 6:83 of the Civil Code: situations of default by operation of law. Article 6:262 of the Civil Code: suspension. Article 6:265 of the Civil Code: dissolution. Under CISG Articles 45-52 (seller) and 61-65 (buyer): performance, replacement, price reduction (Article 50), dissolution for fundamental breach (Article 25), damages (Article 74).
Under English law, condition vs warranty (Sale of Goods Act 1979); breach of condition direct right of termination.
Remedy
Dutch law
CISG
Notice of default
Article 6:82 of the Dutch Civil Code required
Not required (Nachfrist optional)
Performance
Article 3:296 of the Dutch Civil Code
Article 46 CISG
Dissolution
Article 6:265 of the Dutch Civil Code
Article 49 CISG in case of fundamental breach
Damages
Article 6:74-95 BW
Article 74 CISG
Suspension
Article 6:262 BW
Article 71 CISG (for partial)
Remedy
Dutch law
CISG
Notice of default
Article 6:82 of the Dutch Civil Code required
Not required (Nachfrist optional)
Compliance
Article 3:296 of the Dutch Civil Code
Article 46 CISG
Dissolution
Article 6:265 BW
Article 49 CISG regarding fundamental breach
Damage
Articles 6:74-95 BW
Article 74 CISG
Suspension
Article 6:262 BW
Article 71 CISG (for partial)
What risks do companies face? (What goes wrong in the event of breach of contract?)
Late notice of default under Article 6:82 BW leads to loss of the right to damages. Extrajudicial dissolution without cause itself constitutes a breach of contract and can lead to counterclaims. Awkward suspension under Section 6:262 of the Dutch Civil Code can be disproportionate. Regarding the CISG: the fundamental breach threshold under Section 25 is high. In international proceedings, unexpected outcomes arise due to divergent legal systems.
Practical example from our practice (How did we win a breach of contract case?)
Musch Legal represented a Dutch supplier who was faced with an Italian buyer who paid late and returned products without cause. We sent a formal notice of default under Section 6:82 of the Dutch Civil Code with a 14-day deadline. In the absence of a response: dissolution under Section 6:265 of the Dutch Civil Code with a claim for lost profits under Section 6:74 of the Dutch Civil Code. NAI arbitration yielded the client 380,000 euros plus costs within 14 months. Procedural diligence (notice of default period, documentation) was decisive.
What can you do? (What breach of contract strategy are you developing?)
Document the breach of contract carefully: dates, scope, communication. Send a formal notice of default under Section 6:82 of the Dutch Civil Code with a reasonable time limit. Keep time limits for the exercise of rights short. For CISG: coordinate the post-judgment procedure under Section 47. Combine with suspension (Section 6:262 of the Dutch Civil Code) where possible. Build a position of evidence for damages. Negotiate a settlement prior to proceedings where feasible. Engage Musch Legal for a breach of contract strategy.
What are the consequences of breach of contract?