Supreme Court 15 December 2017: Notice of default not always required when a contractor defaults

This judgment is an interesting one for contractors and the people who advise them. It concerns an agreement between a client and a contractor in Curaçao, for the latter to renovate the client’s house. The client was not satisfied with the result and took the contractor to court.

One of the contractor’s defences was that he was not in default/had not been served notice of default. The client countered that, whilst he had not formally served notice of default on the contractor, he had repeatedly made it known that the work was below par and that he had given the contractor several opportunities to rectify his mistakes, to no avail. According to the contractor, the work was sound and had been completed. The court rejected this defence on the grounds that ‘it has not been shown that notice of default should a priori be regarded as pointless.’

The client appealed this ruling.

Legal context the Supreme Court’s ruling

The legal premise is that a claim for breach of contract (formally: a failure in the performance of the agreement) can only be made if the opposite party is in default. There are, however, numerous exceptions to this rule. I summarized these in late 2015, in the blog at this hyperlink. Essentially, the client is relying on the exception that notice of default is not required when ‘the creditor must conclude from a statement of the debtor that he will not perform in conformity with his obligation’ (Book 6 Article 83 opening words and para. c of the Dutch Civil Code.

The Supreme Court found in favour of the client. The question that the court had to answer was whether the client ought to have deduced from the contractor’s statement that, in his view, the work had been properly delivered and was not defective that the contractor would fail in the performance of the contract for building works. Were this so, he would be in default pursuant to Book 6 Article 83 opening words and para. c of the Dutch Civil Code. The court neglected to do this, with the result that the case has to be reassessed by the court.

Lesson for contractors

As we all know, a client complaining about the standard of work done is a frequent occurrence. If the contractor has dismissed such complaints, he may be instantly in default. The client can then bring proceedings right away, without the contractor getting the opportunity to put the failings right.