Mistake and Non-Conformity in the Event of Non-Performance

When entering into a contract, you are generally obligated to comply with its terms. However, it can occur that, for instance, the car you purchased is not in the condition you initially believed. For example, the battery may not work, or there may be significant rust. In such cases, you may wonder whether you are still obligated to fulfill your agreement with the seller. Not necessarily! You may have been mistaken, which allows you to annul the contract. This blog will examine the concept of mistake and the related doctrine of non-conformity.

Mistake

The Dutch Civil Code (Article 6:228 BW) defines a mistake as a situation where a contract would not have been entered into if you had a correct understanding of the facts. This means you would not have purchased the car if you had known the battery was faulty or that there was significant rust.

To successfully invoke a mistake, certain criteria must be met. First, you must demonstrate that you would not have entered into the agreement had you known the true condition of the item. An essential factor here is the "noticeability requirement," which means it must have been apparent to the other party that you would not have concluded the contract if you had been aware of the defect.

Three Types of Mistake SituationsThere are three distinct situations that may involve a mistake, as listed in Article 6:228(1) BW. The first occurs when the other party has made an incorrect statement that led you to make a mistake, such as the seller claiming the battery is in good condition when it is not. However, general claims such as "the best laptop in the Netherlands" do not qualify.

The second situation arises when the other party has withheld crucial information, such as not mentioning the battery's condition. In this case, the other party has a duty to inform you of all material facts.

Lastly, there may be mutual mistake, where both parties are unaware of a defect, such as the seller also not knowing that the battery is defective.

It is important to note that the party making a mistake has an obligation to conduct independent research. If rust is visible on the car, for example, you generally cannot later claim a mistake if you fail to inspect it properly. However, you are entitled to rely on the accuracy of the other party’s statements. If the other party fails in their duty to inform you, they cannot argue that you should have performed a better investigation.

Non-Conformity

A related but distinct concept is non-conformity (Article 7:17 BW), which applies exclusively to sales contracts. Non-conformity occurs when the delivered goods do not meet the expectations set by the agreement. For example, if you expected the car to be in good condition but the engine fails after just 2 kilometers, the car is considered non-conforming.

While both mistake and non-conformity are related doctrines, their legal consequences differ significantly. A mistake allows for the contract to be annulled, which has retroactive effect (Article 3:53 BW). This means the contract is treated as if it never existed, and you can return the car and receive a refund. In cases of non-conformity, other legal consequences may apply, such as claiming damages for breach of contract (Article 6:74 BW) or seeking contract termination (Article 6:265 BW). The primary distinction between mistake and non-conformity lies in the desired outcome of your claim.

Need Legal Advice?

If you have questions about mistake, non-conformity, or contract law in general, please feel free to contact one of our attorneys.