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Cultivation as a contract default (?)

Introduction


The increasing demand for rental housing on the one hand and the housing shortage on the other hand make it very difficult for tenants to obtain housing. Moreover, the lucky one selected by the landlord has to fulfill all kinds of obligations arising from the law and the lease agreement. The law stipulates that the tenant must behave as a good tenant. The lease agreement further fills out this obligation. If the tenant fails to fulfill its obligations, there is a chance that the lease may be terminated. This blog discusses whether growing marijuana constitutes a default on the basis of which the lease can be terminated and what a tenant or landlord should take into account when entering into the lease.


Dissolution


"Any shortcoming of a party in the performance of one of its obligations gives the other party the power to dissolve the contract in whole or in part, unless the shortcoming, in view of its special nature or minor importance, does not justify such dissolution with its consequences."


According to a ruling of the Dutch Supreme Court, only a shortcoming of sufficient weight gives the right to dissolve the contract. In principle, the cultivation of marijuana constitutes a shortcoming. The circumstances of the case may lead to a different judgment. For example, the Amsterdam Court ruled that the tenant had not breached the contract by growing no less than 51 (!) hemp plants in the house. In doing so, the Amsterdam Court took the following circumstances into account:

  • The tenant needed the plants for medical purposes;

  • The cannabis supplied through the pharmacy was not suitable to treat the tenant's ailments;

  • Buying cannabis in a coffee shop was not possible because the tenant's health insurance company would not reimburse for it;

  • The tenant had taken all possible avenues to prevent home cultivation, but at this point saw no other option to have properly functioning cannabis at his disposal.

The Amsterdam Court further noted that the lease concluded between the parties did not specifically prohibit the cultivation of hemp.


In conclusion


Only a shortcoming of sufficient weight gives the right to terminate the contract. Whether this is the case depends on numerous circumstances. What was contractually agreed upon is one such circumstance.


Having said that, the mere fact that the agreement between the parties does not specifically prohibit the cultivation of hemp does not make the tenant entitled to grow hemp. Growing marijuana, in principle, constitutes a default. Dissolution of the contract on the basis of this shortcoming, however, is not a given. Certainly not if the tenant is restricted in his ability to have cannabis at his disposal (as is currently the case in the Netherlands with regard to medicinal cannabis).


Want to know more?


To avoid discussions about the rights and obligations of the parties, a detailed contract is crucial. Feel free to contact one of our lawyers.




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