contract-law european-union netherlands
If a party does not fulfil an obligation of a clause, and the other party ignores the failure for a long time, is the clause still legally valid?
<p>Say there's a clause (art. 14) that creates an obligation for party A, from which an obligation for party B follows. Say it looks like this:</p>
<blockquote>
<p>art.14. Every year, no later than six months after the end of that
calendar year, Party A will provide Party B with a section-by-section
overview of the costs for service A.</p>
</blockquote>
<blockquote>
<p>art.15. What appears from the
overview, taking into account advance payments made by Party B to
Party A, whether Party A has been paid in advance too little by Party
B or Party B paid in advance too much to Party A, must be paid or
repaid within one month after the overview has been provided to Party
B.</p>
</blockquote>
<p>These articles happen to be in a <code>General terms and conditions</code> document that is part of the contract, through an article in the contract that says that the general terms and conditions are part of the contract.</p>
<p>Party B happens to have been negligent and considered the advance payments as flat rate for the service. This understanding came to Party B partly because, according to Party B, that is how the agreement was presented by Party A, contrary to the letter of the agreement. This understanding comes also partly from previous clients of Party A, who also considered the fixed monthly payments as flat rates that do not need settlement. These clients used the service for years, stopped using it, and never received an overview for settlement according to art.14.</p>
<p>For more than 5 years, party A ignores their obligation regarding art.14. and never mentions it. Party B does not try to enforce art.14, because, in their mind, such an article was never part of the agreement.</p>
<p>In the second half of the 6th year, Party A tries to enforce art.14, by providing an overview for settlements over the previous 2 years going backwards from the moment of submitting the overview.</p>
<p>Considering that:</p>
<ol>
<li>Party A demonstrated a history of not fulfilling their obligations according to art. 14 in relation with Party B, but also in relation with other Parties with whom it had similar agreements.</li>
<li>Party A never mentioned article 14 from the general terms and conditions at signing.</li>
<li>Party B never objected to Party A not fulfilling their obligations.</li>
</ol>
<p>I would argue that there was an implied in fact agreement that the advance payments are fixed flat rates for service A, because both parties met in mind and abided by this agreement through their actions, i.e. Party A never submitted an overview, and Party B always paid the advance payments in time.</p>
<p>This implied in fact agreement of parties goes in conflict with art.14. Provided that the implied in fact agreement stands legal scrutiny, and considering that meeting of minds must have happened after the signing of the written agreement, the implied in fact agreement is newer, thus supersedes art.14 of the written agreement.</p>
<p>For what is worth, the situation stems from a rental agreement in the Netherlands, so EU/Dutch law applies to the original case. Nevertheless for the purpose of this question, I am interested in what principles of law apply, especially from civil law, but I am also curious of an interpretation according to common law.</p>
<p>I am not a legal expert, but I am familiar with some principles of laws. The above is a working example, but my general question is whether a clause in a written contract is valid and enforceable, if all parties took regular actions contrary to the clause for a very long time without any dispute. An analogy to the above situation would be a written agreement of parties that monthly, 10$ would be exchanged for a selfie, for a period of 20 years. Then 19 years pass and nobody ever sent a selfie, or 10$ in exchange, or took any action with respect to that agreement, but one party starts sending selfies (many years later) and asks for their rightful 10$. In my mind, that's just crazy, but then again, I'm not a lawyer. What do the experts think?</p>

<h2>Party A has breached the contract</h2>
<p>Party A had an obligation that it did not fulfil, providing the section-by-section overview of the costs.</p>
<p>To the extent that Party B suffered damage from each breach, for example, because Party A owes a refund, Party B can recover that plus interest subject to any statute of limitations on actions for contract breach. To the extent that Party A suffered damage, tough - they don’t get to benefit from their own breach.</p>
<p>Party A might wish to argue that Party B has <a href="https://sklawyers.com.au/dictionary/waiver/" rel="nofollow noreferrer">waived</a> their right to adjust the payment but this would be difficult to prove. It doesn’t appear that there is an explicit waiver but neither is their an implied waiver: Party A would need to show that Party B was aware of and condoned the breach in some way.</p>
<p>You are right that a contract can be altered after it is entered into and that such a change can be implicit rather than explicit. But that would require showing some action rather than inaction by the parties to effect a different arrangement. In practice, where one party affirms the written contract, without clear and compelling evidence that the contract has subsequently been changed, the written contract will prevail.</p>
<p>For an example, Yale University periodically collects the interest due on a perpetual <a href="https://news.yale.edu/2015/09/22/living-artifact-dutch-golden-age-yale-s-367-year-old-water-bond-still-pays-interest" rel="nofollow noreferrer">bond</a> originally issued by the Dutch water board Lekdijk Bovendams on 15 May 1624. Originally issued with a principal of &quot;1000 silver Carolus gulders of 20 Stuivers a piece&quot;, as of 2004 the yearly interest payment to the bondholder is set at €11.35 (15€ as of 2018 = 16$). According to its original terms, the bond would pay 5% interest in perpetuity, although the interest rate was reduced to 3.5% and then 2.5% during the 18th century. Providing it is physically presented to the successors of the board (the Dutch Water Authority) interest must be paid even if it has been many decades since the last payment. Of course, practically, crossing the Atlantic to collect 15€ every year is not commercially viable so they do it every decade or so when someone from Yale is going there anyway and then, only for the historical value. So long as the Netherlands continues to exist as a legal entity, this obligation will continue.</p>

<blockquote>
<p>If a party does not fulfil an obligation of a clause, and the other party ignores the failure for a long time, is the clause still legally valid?</p>
</blockquote>
<p>Yes, the clause remains valid. But only breaches where the <a href="https://dutch-law.com/limitation-of-actions.html" rel="nofollow noreferrer">statute of limitations</a> has not expired are actionable.</p>
<p>A party's waiver of his entitlement pursuant to specific breaches of contract --or a pattern of breaches-- does not eliminate the explicit clause on which that entitlement is premised. There is a difference between (1) the intended elimination of a clause, and (2) a party's waiver of an explicit right that is intended to subsist.</p>
<p>Some explicit contracts establish that any amendments have to be in writing and signed by the parties, or otherwise memorialized. However, that type of clauses is largely redundant because the aforementioned difference is cognizable also in contracts that have no such clause. The clause is also pointless insofar as the parties are entitled to systematically waive their rights anyway (i.e., by never enforcing them).</p>
<p>In the scenario you describe, party A's waiver --whether apparent or official-- of art. 14 with respect to any similar contracts elsewhere is irrelevant to its explicit contract with party B. The written contract supersedes common practice. See <a href="http://www.oneclubofjusticides.com/p/restatement-second-contracts.html" rel="nofollow noreferrer">Restatement (Second) of Contracts</a> at §203(b) (&quot;<em>express terms are given greater weight than course of performance</em>&quot;).</p>
<p>Nor does party A need to remind party B about art. 14 when signing. Party B knows or is expected to know and understand the contents of the contract it signs. Since art. 14 is in the General Terms and Conditions, the &quot;<em>article in the contract that says that the general terms and conditions are part of the contract</em>&quot; further weakens party B's allegation that party A did not mention art. 14.</p>
<p>Party B's silence regarding party A's non-compliance with art. 14 helps toward lawful avoidance of art. 14 on those specific instances of non-compliance, but that does not alter the general validity of that provision.</p>
<p>That being said, party A's actionability on art. 14 is limited to overviews that comply with the timing provided in that article: no later than six months after the end of the calendar year. Thus, party A's failure to provide an overview during the first semester of a calendar year forfeits enforcement of art. 15 in regard only to that specific year.</p>
<p>Without knowing more about the contract at issue, it is reasonable to presume that art. 14 refers to costs pursuant to only the previous year. Costs that should have been billed in prior years are not to be included in the overview. Otherwise, art. 14 would be meaningless because all party A would have to do on belated costs is wait till new year. That would contravene an important principle formulated in <em>Restatement (Second) of Contracts</em> at §203(a): &quot;<em>[A]n interpretation which gives a[n] [...] effective meaning to all the terms is preferred to an interpretation which leaves a part [...] of no effect</em>&quot;.</p>
<p>These principles apply to Dutch contract law as well as in common law jurisdictions. Dutch contract law has what is known as the <a href="https://dutch-law.com/interpretation-contract-dutch-law.html" rel="nofollow noreferrer">Haviltex rule</a> for superseding the literal wording of a contract. However, the scenario you describe gives no room for interpreting that art. 14 has been stricken from the contract. Party A simply did not enforce his right for a number of years.</p>
