THE BOTTOM LINE
- Past Practice Creates Binding Precedent: A long-standing, informal business practice can become a legally binding part of your agreement, overriding clauses in your signed order forms or contracts.
- General Terms are Not Automatic: Simply referencing your General Terms and Conditions (GTCs) is not enough. If you fail to actively provide them to your counterparty, a court may declare them unenforceable, removing crucial protections like liability caps.
- Don’t Change the Rules Mid-Crisis: You cannot unilaterally revert to strict written contract terms after years of a more flexible arrangement, especially when a significant problem arises. Consistency in conduct is key.
THE DETAILS
This case revolved around a long-term relationship between a supplier of young hydrangea plants and a grower who cultivated them for retail. For years, they operated under a flexible, unwritten understanding: if any plants failed during the growing phase, the supplier would replace them free of charge or compensate the grower for any losses. However, during the 2023-2024 season, an unprecedented number of plants failed due to disease. Faced with massive replacement costs, the supplier attempted to enforce the strict terms of its order confirmation, which limited liability, and sued for outstanding payments.
The District Court of The Hague sided decisively with the grower, ruling that the parties’ consistent course of dealing over many years had become the true contract. The court found that the supplier’s established practice of replacing all failed plants and covering losses had created binding obligations that superseded the more restrictive clauses in the written order forms. The supplier’s own actions—such as replacing 270,000 plants for free and compensating the grower for a missed order with a major retailer (Lidl)—were seen as confirmation of this unwritten agreement. The court determined that the supplier could not suddenly change these established rules when the arrangement became financially inconvenient.
A critical factor in the decision was the unenforceability of the supplier’s GTCs. The supplier had referenced them in order forms but could not prove they had ever actually provided a copy to the grower, either at the start of their relationship in 2007 or at any point since. The court declared the GTCs voidable, meaning the supplier could not rely on key clauses that prohibited set-offs and excluded liability for consequential damages. This case serves as a stark warning: your business practices can and will be used to interpret your contractual obligations, and procedural formalities like providing GTCs are not mere technicalities—they are essential for protecting your business.
SOURCE
Source: Rechtbank Den Haag
