Disputes after completion of the sale and purchase agreement2022-06-23T09:43:34+00:00

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Disputes after completion of the sale and purchase agreement

A share transfer or asset/liability transaction is generally a complex process and has many pitfalls. It goes without saying that good advice on such a takeover contract is necessary, in which the agreements between the parties are clearly and correctly recorded.

Sale and Purchase agreements

Despite all the best intentions of the parties at the time of entering into the agreements, it may well be that a dispute arises regarding the meaning of certain wording in the sale and purchase agreement or related agreements. It could also be that certain aspects have not been covered at all in the share transfer agreement or not sufficiently. In these instances it is very important to seek legal advice in order to settle these matters by amending the agreement or by implementing the escalation procedure in the agreement. The latter should only be used when parties have tried their best to find a solution as going to court may not give you the answer that you are hoping for.

Post-acquisition disputes

We often have to deal with disputes that arise after an acquisition has taken place. For example, if the parties agree on what should be understood by different terms included in the agreement. Or when there is a disappointing turnover or goodwill. We often speak of an error; the agreement would not have been concluded – or would not have been concluded under the same conditions – if the facts had been correctly presented. It is important to be aware of the obligation of the buyer or seller to investigate and provide information.

In addition, a sale and purchase agreement is often accompanied by a subordinated loan or payment in instalments. It often happens that part of the purchase price is paid by the buyer in the form of a subordinated loan or in instalments and that the buyer is granted a right of suspension in respect of the obligations under that subordinated loan or instalment. In the event of an alleged breach of a provision of the takeover contract, this right of suspension shall then be exercised swiftly. Disputes often arise as to whether the buyer can invoke the right of suspension.

Other post-acquisition disputes may consist of:

  • Violation of guarantees; in the case of a guarantee, the seller guarantees that certain facts, which relate to, for example, the shares, or (parts of) the business operations, do or do not occur.
  • Infringement of warranties; in the case of an indemnification clause, the buyer is often fully compensated for the matters regulated in the indemnification clause. An indemnification generally relates to foreseeable risks of facts (communicated by the seller or resulting from, for example, a due diligence investigation) that are known or to be expected.
  • Infringement of non-competition clauses; if the vendor undertakes vis-à-vis the purchaser not to engage in competitive activities with the transferred company.

Legal possibilities

In the case of post-acquisition disputes, we often see that compliance, dissolution and damages are claimed. Destruction of the agreement, with an invocation of error, may be one of the possibilities, but in practice we often see that this may be excluded. However, this does not alter the fact that in some cases annulment can nevertheless be invoked.

The above points are some of the various disputes that can arise from a readmission agreement. If you, as a buyer or seller of shares or of an asset/liability transaction, are involved in a takeover dispute, please submit it to us. We will make a process analysis for you and act on your behalf if the case is brought to court.

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SPECIALIZED LAWYERS

These are our lawyers who are specialized in this area.

Hans Rijntjes

+31 (0)10 209 27 75
rijntjes@lvh-advocaten.nl
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Received a subpoena? Five points of attention

Received a subpoena? Five points of attention

Have you received a subpoena from the bailiff and are you wondering what to pay attention to when studying the subpoena?
In this article, we will give you five tips for studying a summons.
You can infer a lot from a summons, such as by what date you must respond to the summons, what happens if you don’t respond, and whether or not you are required to be assisted by a lawyer.

1. Parties in the subpoena

A writ of summons first of all states on behalf of which party (plaintiff) the bailiff has issued the writ of summons to you. From the summons, you can therefore deduce by whom the proceedings against you have been initiated. If that party is assisted by a lawyer/authorized representative, this will also be mentioned in the summons.
We advise you to always check carefully whether you are the right party being summoned by the plaintiff. For example, it is possible that you are director of several companies, but that the other party has subpoenaed the wrong company from you.

2. Roll date and appearance in court

Furthermore, the subpoena will also include by what date and before what court you must appear. Below is an example of such a passage:

“to appear, in person or represented by an agent, at the public hearing of the District Court of Rotterdam, Subdistrict Section, location Rotterdam, on Wednesday the twenty-eighth of August, at 10:00 a.m., sitting there at Wilhelminaplein 100-125 in Rotterdam”

The date, as mentioned in the summons (in the example 28 August 2022), is also called ‘the court date’. By this date, you must respond to the summons, barring any postponement. In subdistrict litigation, you may defend yourself orally before the court on the date and time stated, but it is also possible to submit a written defense (called a ‘statement of claim’) to the court by this date.

In the case of a commercial case, your lawyer will have to file a statement of defence. In most cases, you will also be able to request a postponement of the delivery of the Opinion.

Please note: does it concern a summary proceedings subpoena? Then the date mentioned in the summons is the date on which you must appear in court.

3. Assistance from a lawyer

In the same passage in the summons, you can also read whether or not you are required to be assisted by a lawyer. For example, in commercial and civil appeal cases you are required to be assisted by a lawyer. In subdistrict cases, on the other hand, you may litigate in person or be assisted by an attorney. Of course, it is often advisable to be assisted by a lawyer.

4. Notice

The summons will also contain a ‘notice’. This will state, among other things, whether and how you can respond to the summons (see also paragraph 2. Roll date and appearance in court). It will also state whether a court fee will be charged if you appear in court. It will also explain what will happen if you do not appear in court. Finally, the notice will state whether or not you are required to be assisted by a lawyer (see also paragraph 3. Assistance by a lawyer).

5. The petitum (the conclusion of the summons)

Finally, it is important to carefully study the conclusion of the summons. This is also referred to as the ‘petitum’. The petitum of the summons states what the plaintiff claims from you. An example of a petitum reads as follows:

“IT IS HEREBY ORDERED THAT: your court may order the defendant to pay a principal sum of € 10,000.00 by way of a judgment, executable in law.”

Need legal advice with a summons?
Have you received a subpoena and do you want advice about it or do you want to subpoena a party yourself? Do not hesitate to contact us. Gentia Niesert, attorney at law, will be happy to help you.

 

The penalty clause: where and when?

The penalty clause: where and when?

A penalty clause is a clause in a contract which states that a party must pay a penalty if it fails to fulfil a contractual obligation. Penalty clauses come in all shapes and sizes and can often be recognised simply by the word ‘penalty’. Penalty clauses can, for example, be found in lease agreements, purchase agreements, settlement agreements, money loan agreements, employment contracts and general terms and conditions.

In this article we will explain, based on three agreements, how to recognise a penalty clause and when it can be invoked:

1. Penalty clause in a contract of sale of a house

The following penalty clause is almost always included in NVM contracts for the sale of residential property:

“On dissolution of the contract of sale on the basis of attributable failure, the defaulting party shall forfeit for the benefit of the other party an immediately payable penalty of ten percent (10%) of the purchase price without judicial intervention.”

We regularly receive cases in which the seller claims the penalty because the buyer has failed to take possession of the property due to the fact that he/she is unable to arrange financing (and has not included a financing reservation). The starting point in that case is that the seller can dissolve the contract and claim 10% of the purchase price of the property.

2. Penalty clause in rental agreement

Penalty clauses are also regularly found in general terms and conditions of rental agreements (residential and business premises). Think of a provision with the following purport:

“The tenant shall owe an immediately due and payable penalty of €25 per calendar day for each obligation he fails to fulfil.”

If a tenant fails to pay his rental payments or uses the rented property contrary to its purpose, for example, the landlord can claim the penalty.

3. Penalty clause in money loan agreements

Penalty clauses also occur in money loan agreements. Consider the situation where party X borrows an amount from the bank to finance his/her home and owes penalty interest if payment is not made on time:

“In the absence of timely payment as referred to in Article (…), party X shall forfeit an immediately payable penalty interest of 6% of the overdue amount.”

For example, if X does not pay interest or repay on time, the bank can claim the penalty interest.

Mitigation of penalty

The starting point is that the full penalty must be paid. However, a court can decide to moderate the amount of the fine if granting the fine leads to an excessive and therefore unacceptable result. This depends on the circumstances of the case.

Do you need advice on penalty clauses?

Do you have a case in which you are claiming an amount of penalty or are actually owed the penalty? Or do you need help in drafting a penalty clause? Then you have come to the right place. As lawyers with experience in contract law, we regularly come across penalty clauses. Gentia Niesert, lawyer in contract law, will be pleased to help you.

A right to compensation after termination of cohabitation without a contract or marriage?

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The Supreme Court issued an interesting judgment on the question whether a partner is entitled to compensation from the ex-partner after ending cohabitation without a contract (also referred to as: informal cohabitation).

Right to compensation of ex-partner in case of termination of cohabitation without contract or marriage?

The case is clear. A man and a woman lived together without a marriage, registered partnership or cohabitation contract. They have a child together. The partners lived in a house owned by the husband. The (mother of the) woman took care of an expensive renovation (€ 74,000) of the man’s house. The man was financially unable to take care of the renovation himself. The partners did not agree on the costs of the renovation. Subsequently, the relationship was broken off. The question is whether the woman has a right to compensation towards the man concerning the costs she paid for the renovation.

Judgment of the Court of Justice on the right to compensation of ex-partner

The Court rejected the woman’s claim because they saw no legal basis for the claim. There is no contractual basis, because there is no cohabitation contract or agreement on the costs of the renovation. Article 1:87 of the Dutch Civil Code, which deals with compensation rights between spouses and registered partners, does not apply either, because there is no marriage or registered partnership. Nor can there be a corresponding application of the article. Furthermore, the Court of Appeal notes that on the basis of what has been stated by the woman he cannot establish that there is a claim on the basis of unjust enrichment.

Judgment of the Supreme Court on the right to compensation and the role of reasonableness and fairness in informal cohabitation

The Supreme Court upholds the judgment of the Court of Appeal. In order to accept unjustified enrichment, it is necessary to establish that if the woman had not borne those costs, the man would have made those costs himself or would have been obliged to make them. Since the man did not have financial means to incur the costs, there is no reason to believe that he would have incurred them. Therefore, the mere fact that the woman incurred costs does not automatically lead to the conclusion that the man saved himself the costs.

However, according to the Supreme Court, the above does not alter the fact that there is a legal relationship between informal cohabitants that is partly governed by reasonableness and fairness. It continues:

“Even if, with regard to certain expenses, a right to compensation from one cohabitant to another cannot be assumed on the basis of an agreement concluded between the parties or on the basis of the other legal figures regulated in Book 6 of the Dutch Civil Code, such a right to compensation may, in connection with the special circumstances of the case, arise from the requirements of reasonableness and fairness referred to in Article 6:2 paragraph 1 of the Dutch Civil Code”.

The Supreme Court considered that it would then have been up to the woman to establish the special facts and circumstances which, according to standards of reasonableness and fairness, imply that she has a right to compensation towards the man. The woman catches the bone after all:

“The documents of the proceedings allow no other conclusion than that the woman has not stated any special facts and circumstances which, assuming that the man was financially incapable of paying the costs of the renovation himself and that the renovation has not enriched her, may nevertheless mean that she has a right to compensation towards the man resulting from the demands of reasonableness and fairness”.

In this specific case, therefore, no compensation is granted in the event of termination of cohabitation without a contract.

No agreement, but a legal relationship between informal cohabitants

The Supreme Court’s interpretation of the legal relationship between cohabitants is interesting. Apparently, the Supreme Court does not assume that cohabitation creates an agreement, but it does create a legal relationship that is governed in part by reasonableness and fairness.

Do you have any questions about your rights when ending informal cohabitation? Please contact Peter de Graaf or Hans Rijntjes.

Bouwe Bos

+31 (0)10 209 27 63
bos@lvh-advocaten.nl
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Prejudgment attachment: what is it and how does it work?

You may have seen the term “prejudgment attachment” pass by. In this article we will explain what prejudgment attachment is and how the process of prejudgment attachment works.

What is precautionary attachment?

The word “conservatory” is derived from the verb “conserve,” or preserve. When an attachment is made, goods or property are preserved until the court has made a final decision. A prejudgment attachment is usually used to prevent the other party from disposing of or mortgaging goods or property. There are various types of prejudgment attachment possible. Consider, for example, prejudgment attachment:

  • under third parties (such as bank seizures and wage garnishment);
  • under the debtor himself;
  • on an immovable property (such as seizure of a home);
  • on movable property (such as seizure of cars, boats, or trading stock);
  • on registered shares, and registered securities that are not shares;
  • On ships;
  • on aircraft.

To illustrate an example. Car company X has sold a car to Y. Subsequently, Y fails to pay the invoice of the car to X. Y can pay the invoice, but has no desire to pay the invoice. In that case, X could, for example, consider making a prejudgment attachment on the car or on Y’s bank account.

When may you have a prejudgment attachment imposed?

The process of garnishment works as follows. A lawyer files a petition with the preliminary relief judge of a district court. This petition is also called an ‘attachment petition’. The application for attachment indicates, among other things, what type of precautionary attachment is desired and what the underlying claim is.

The application for attachment is then summarily reviewed by the interim relief judge of a court. The judge in preliminary relief proceedings informs the lawyer whether or not to grant ‘leave’ (permission) for the attachment to be made.

If the judge grants leave, the lawyer receives a so-called ‘leave order’. As soon as the order for leave has been received, the bailiff can go ahead and impose a prejudgment attachment.

What happens after a prejudgment attachment has been levied?

After the precautionary seizure has been made by the bailiff, a ‘claim in the main action’ will often still have to be filed. This is a procedure before the court concerning the dispute on which the attachment is based. In most cases, the claim in the main action is instituted by issuing a writ of summons. It is also possible that the precautionary seizure is made during ongoing proceedings. In that case, it is not necessary to institute a new ‘claim in the main action’.

Would you like to know more about prejudgment attachment?

Would you like to assess whether a prejudgment attachment can be levied on the assets of your counterparty, or has a prejudgment been levied on you yourself, and would you like advice on this? Then you have come to the right place. Please feel free to contact us. Gentia Niesert, procedural law attorney at LVH Advocaten in Rotterdam, will be happy to help you.

Gentia Niesert

+31 10 209 27 77
niesert@lvh-advocaten.nl

(more…)

More about conflicts

Received a subpoena? Five points of attention

August 23, 2022|

Have you received a subpoena from the bailiff and are you wondering what to pay attention to when studying the subpoena? In this article, we will give you five tips for studying a summons. You can infer a lot from a summons, such as by what date you must respond to the summons, what happens if you don't respond, and whether or not you are required to be assisted by a lawyer.

The penalty clause: where and when?

May 19, 2022|

A penalty clause is a clause in a contract which states that a party must pay a penalty if it fails to fulfil a contractual obligation. Penalty clauses come in all shapes and sizes and can often be recognised simply by the word 'penalty'.

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