The Bottom Line
- Agreements that Harm Third Parties are Unenforceable: A Dutch court has ruled that a contract is void if its core purpose is to disadvantage a third party, such as an estate or its creditors. Such agreements are considered contrary to public morals.
- Intent Matters More Than Outcome: The court’s decision hinged on the intention behind the agreement, not whether financial harm was actually caused. The presence of a confidentiality clause was seen as evidence of improper intent.
- No Contract, No Claim: A void agreement is legally considered to have never existed. Consequently, no party can sue to enforce its terms, resulting in a total loss of the expected financial gain and legal costs.
The Details
In a case with significant implications for deal-making, the Rotterdam District Court has refused to enforce a profit-sharing agreement related to a property sale, declaring it void. The case involved an heir to an estate who struck a side-deal with a potential buyer of a property belonging to that estate. The arrangement was simple: the heir would use his position to help the buyer acquire the property for a below-market price. In return, the heir and the buyer would secretly split the “profit”—the difference between the low purchase price and the property’s appraised value.
The court’s reasoning was direct and uncompromising. It found that the agreement’s fundamental purpose, or “strekking,” was to knowingly disadvantage the estate. By siphoning off a portion of the property’s potential value for the personal benefit of one heir, the deal inherently harmed the collective interests of the other heirs and any potential creditors. Such an objective, the court ruled, is contrary to public morals (“in strijd met de goede zeden”) and is therefore void under Article 3:40 of the Dutch Civil Code. This means the contract has no legal effect from the outset.
This judgment serves as a powerful reminder that Dutch courts will look beyond the letter of a contract to its underlying commercial and ethical purpose. The claimant argued that since the property was ultimately sold at a supervised public auction, no actual fraud could have occurred. The court dismissed this, clarifying that the legality of an agreement is judged by its intent at the time of its creation, not by its ultimate success or failure. The inclusion of a clause demanding the arrangement be kept “discreet” further convinced the court of its improper nature. For executives and legal counsel, the message is clear: structurally “creative” deals that rely on secrecy to divert value from rightful beneficiaries carry a high risk of being nullified.
Source
Rechtbank Rotterdam
