THE BOTTOM LINE
- Get consent for contract takeovers: When transferring an entire business relationship (both rights and obligations) to another entity, you must get your counterparty’s consent. Simply notifying them is not enough.
- Assignment vs. Takeover is critical: Dutch law strictly distinguishes between assigning a single claim (a “cessie“) and transferring a whole contract (a “contractsovername“). Using the wrong procedure can invalidate the transfer.
- Corporate housekeeping matters: Failing to correctly document and execute internal transfers between group companies can make it impossible to enforce your commercial agreements and collect debts.
THE DETAILS
In a cautionary tale for companies undergoing internal restructuring, a Dutch court has ruled that a holding company could not collect a debt because the underlying contract was improperly transferred from its operating subsidiary. The case revolved around a dispute between SIVO MEDIA HOLDING B.V. (the holding company) and its client, ROYAL COFFEE & TEA INNOVATIONS B.V. (RCTI). The holding company sued RCTI for unpaid invoices, but RCTI argued its contract was with a different entity entirely: SIVO Media Group B.V., the operating company.
The legal heart of the matter was the document used to transfer the business from the operating company to the holding company. SIVO argued this document was a simple assignment of the claim (a “cessie“), which only requires notifying the debtor. However, the court looked past the document’s confusing title (“Deed of Assignment of Takeover”) and examined its substance. The text explicitly stated that “all rights and obligations” were being transferred. This, the court determined, was not a simple assignment of a debt but a full contract takeover (“contractsovername“).
This distinction proved fatal to SIVO’s case. Under Dutch law (Article 6:159 of the Civil Code), a contract takeover requires the cooperation and consent of the other contracting party—in this case, the client, RCTI. SIVO could not produce any evidence that RCTI had ever agreed to this change of contracting party. The court noted that consent can be implicit, but SIVO’s actions—such as including both company logos on invoices—were deemed insufficient to prove it. Without consent, the transfer was invalid, meaning the holding company had no legal standing to bring the claim. The case was dismissed.
SOURCE
Source: Rechtbank Noord-Holland
