In its judgment of 13 January 2012, the Dutch Supreme Court ruled that a professional party (“A-Line”) that ordered the development and implementation of computer software, which has not been implemented by the supplier (“Cubeware”) on the agreed delivery date, is not—under certain circumstances—obliged to send the supplier a notice of default.
A-Line was a distributor of ICT products. After Cubeware had failed to meet the initially agreed delivery date of 1 January 1999, the parties negotiated for a fairly long delivery period extension. The outcome was that they instructed an EDP auditor by June 2000 to investigate the implementation process of the software. The outcome of the audit was negative for Cubeware. Subsequently, A-Line initiated legal proceedings to reclaim approx. €900,000 from Cubeware plus contractual damages and legal interest. One of the principal defences of Cubeware was that A-Line should have sent a notice of default to the former in light of the further discussions.
The Dutch Civil Code (“DCC”) stipulates that there are three instances where a notice of default is not required. One is where the non-defaulting party can clearly infer from the other party’s statement that it can or will not perform its contractual obligations (Article 6:83 at c, DCC).
According to the Supreme Court, the overview of instances where a notice of default is not required is not limitative; the Court found other instances where a notice of default is not required. Additionally, there may be instances where, based on usage or custom, a notice of default is not necessary; thirdly, the Supreme Court referred to other decisions where it had determined that based upon the principles of reasonableness and fairness, in specific instances, a notice of default was not or no longer required. Finally and conversely, the Supreme Court considered that under certain circumstances, a plea that a notice of default would be required could be against the principle of reasonableness and fairness under specific circumstances.
The lower appellate court had ruled that – under the specific circumstances – A-Line could have reached the conclusion, in all reasonableness, that Cubeware would not perform the delivery, implementation, and installation of the agreed computer software. This court reached this conclusion based on, inter alia, the facts that: (a) Cubeware had failed to meet the initially agreed delivery date; (b) the parties had agreed to appoint an independent expert. The prospective continuation of their further cooperation was thus put in the hands of the expert; (c) the report of the expert contained clear statements that any continued involvement of Cubeware would be useless, and that there was no reasonable expectation that Cubeware would be able to complete the delivery in time; (d) even if Cubeware had opposed the expert’s findings, it remained clear that Cubeware had proven to be unable to produce any type of result during the different phases of cooperation with A-Line.
Consequently, according to the Supreme Court, the motivation of the Appellate Court was based on reasoning that Cubeware—under these circumstances— could not, claim in reasonableness and fairness that A-Line should still have sent it a notice of default.
The Supreme Court then moved to confirm the findings of the Appellate Court of Den Bosch.
This case can be found on http://zoeken.rechtspraak.nl, LJN=BU4911