The legislature tries to protect tenants by means of mandatory and semi-mandatory legal provisions.
The regimes for residential accommodation and “article 290 commercial premises” (in short: shops, restaurant and hotels) both set forth a multitude of mandatory and semi-mandatory rules. This means that contracting parties may not deviate from these statutory provisions, or that the lessee may nullify provisions of the lease if they are detrimental to the lessee.
As such, where a dispute arises between parties in connection with a contract, it must first be assessed whether said contract constitutes a lease and, if so, by what regime the lease is governed. According to article 201 of Book 7 Dutch Civil Code, a lease is: "a contract whereby one party, the lessor, undertakes to provide the other party, the lessee, with the use of a property or part thereof and the lessee undertakes to perform a counter-obligation".
The question arises as to which regime applies if a contract contains some elements of a "lease" but also elements of another specific contract, for example a contract for services?
Such situations involve mixed contracts. Article 215 of Book 6 Dutch Civil Code sets forth rules for mixed contracts. Those rules are based on the cumulative theory, which means that the statutory provisions that apply to those specific contracts apply simultaneously. However, this is not the case if the provisions conflict with each other or where the provisions cannot be applied due to the nature of the contract. What do you do then?
On 10 March 2017, the Dutch Supreme Court rendered a judgment that clearly explains this matter.
The dispute between the parties concerned a continuing performance contract to provide catering services during private events in a castle, combined with the right to use spaces for a restaurant open to the public. The restaurant owner/caterer was of the opinion that he was entitled to security of tenure and that the lease termination rules set forth in articles 290ff. of Book 7 Dutch Civil Code applied, at a minimum insofar as the contract concerned the running of the restaurant. The Court of Appeal did not find in his favour and the Supreme Court upheld the Court of Appeal’s ruling. The Supreme Court ruled that the Court of Appeal – after having established that the contract satisfied the description of a contract of lease and hire of commercial premises – rightly examined whether the legal relationship between the parties could be split into two separate contracts. After the Court of Appeal had answered this question in the negative and based on the premise that the rules for cancelling leases on the one hand, and those for cancelling contracts for services on the other hand are incompatible, it rightly ruled that in the case in question the rendering of catering services was central and dominant to such an extent that the rules for cancelling the contract for services had to be applied. Therefore, in the case in question, the contract could be terminated by giving notice of cancellation, without the restaurant owner enjoying any protection.
It appears that in its assessment of the facts, the Court of Appeal attached great importance to the fact that the contract was concluded following a tender and that it had been made clear during the tender process that the contract would be concluded for a limited period only. In addition, the parties were referred to as “client” and “contractor” in the contract, which did not include the word “lease”.
What lesson can be learned from this judgment? You should be aware that mandatory tenancy law can be set aside in the case of a mixed contract. If that is not the intention of one or more of the parties, it should be noted explicitly in the contract that the parties consider the contract to be a lease and opt to have tenancy law apply.