The right of recourse is a convenient way for the seller to recover his good, even in bankruptcy, when the buyer fails to pay the purchase price. Especially in light of the current era, as the protection also extends to protect sellers at the time of the buyer's bankruptcy. The right of recourse aims to provide the seller with protection from defaulting buyers. When a purchase agreement is concluded between the seller and the buyer, and the seller subsequently transfers ownership of the property to the buyer, a legally valid transfer has taken place. The buyer must then, of course, still pay the purchase price. If the buyer fails to do so, the seller can invoke the right to complain in accordance with Article 7:39 of the Dutch Civil Code. A number of conditions must be met for a successful claim.
The seller can only invoke the right of recourse when it comes to movable goods that have already been delivered. Movable goods refer to goods that are not immovable. The land, minerals in the land, structures united with the land and works permanently united with the land (including a house) are immovable. A car is an example of movable property. It is not united with the land.
In addition, the movable property must have been delivered. The delivery occurs when the buyer can exercise actual power over the property. The buyer exercises actual power over a good when he uses the good as if it were his property. Thus, the driver of a car exercises de facto power over the car.
If the buyer does not pay the purchase price, the seller can exercise the right of recourse. In doing so, he must first send a written statement, addressed to the other party, claiming the delivered car back. This written statement must state that the seller dissolves the agreement and reclaims ownership of the delivered item. What is important here is that the sales price has always remained unpaid. Now that the purchase agreement is in fact being dissolved, the seller must also meet the requirements for dissolution as described in Article 6:265 of the Dutch Civil Code.
To dissolve an agreement, there must be a shortcoming in the performance of the reciprocal agreement. A reciprocal agreement simply refers to an agreement in which both parties have rights and obligations. A sales contract is always reciprocal: the seller undertakes to deliver the good, while the buyer has the obligation to pay the purchase price. A default in performance means that one of the parties, buyer or seller, fails to fulfill its obligations under the purchase agreement. For example, the buyer fails to pay the purchase price, or the seller delivers the good too late. In addition, the buyer must be in default within the meaning of Article 6:81 of the Dutch Civil Code. Pursuant to Article 6:81 of the Dutch Civil Code, the buyer is in default during the time that the performance (payment of the purchase price) remains outstanding after it has become due and payable. The seller must then give the buyer notice of default pursuant to Article 6:82 of the Dutch Civil Code, or the default occurs by operation of law pursuant to Article 6:83 of the Dutch Civil Code.
The right of recourse is subject to two specific expiration periods. Article 7:44 of the Dutch Civil Code speaks of a six-week expiration period and a sixty-day expiration period. A reliance on the right of recourse by the seller is no longer possible once both expiry periods have expired. The six-week expiration period refers to the situation when the buyer and seller agree on a date when the purchase price must be paid. If a purchase agreement was entered into on July 1 with a payment period of 14 days, the expiration period does not begin until July 15. Six weeks after July 15, the expiration period expires and the seller's right of recourse expires.
The 60-day period applies when the buyer and seller entered into a purchase agreement without a time clause. The buyer and seller have simply not agreed on when payment is due at the latest. When the item is delivered or stored, the sixty-day expiration period begins to run. Thus, if delivery was made on July 1, the right of recourse expires on August 30 if the sales contract was concluded without a time provision.
Advantage of the right of recourse
The major advantage of the right of recourse is its so-called in rem effect. By this we mean to say that the buyer loses his "in rem" rights, when the seller invokes his right to advertise. Because of this in rem effect, the buyer loses his property rights. The seller can revindicate the property again: the seller can claim the property still under the buyer.
This is especially useful when the buyer is in bankruptcy. Because the seller can revindicate the property, he is not a creditor in the bankruptcy. Under circumstances, the trustee may choose to pay the purchase price in order to get the asset into the estate. The seller can then no longer revindicate the good, but has at least recovered the purchase price.
In this way, the seller can still get his property out of the bankruptcy estate or claim the purchase price.
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