Is the franchisor liable for loss caused by error?

Is the franchisor liable for loss caused by error?

In this case nine parties are holding an international toys wholesaler liable for the loss they suffered from the actions of the wholesaler. The issue before the court is whether the wholesaler acted unlawfully by providing information and forecasts to the claimants that were allegedly misleading and on which the claimants based the financing and operation of their toy stores. Dutch contract lawyer Hidde Reitsma discusses the ruling.

 

Franchisees: franchisor liable for error

The claimants state the wholesaler failed to fulfil his duty of care in the cooperation agreement and by providing information and forecasts caused errors, is in breach of contract and acted unlawfully. The wholesaler states that he only provided general market data and target turnovers. He also appeals to the exclusion of his liability in the agreement, a so-called exoneration clause.

Did the franchisor fail to fulfil his duty of care?

According to the court, a franchise agreement does not automatically mean that the franchisor has to inform the franchisee about the turnover or profits to be expected. There is only a unlawful act in the provision of information if the franchisor knows, when providing these data, that these data contain serious errors and fails to point out these errors to the other party. That does not apply in this case. In fact when providing the data the wholesaler always equivocated and referred to an expert.

Court: exoneration clause not unreasonably onerous

The claimants state that the exoneration clause in the contract is a general condition and is therefore subject to nullification. The court finds that the clause is indeed a general condition, because the clause does not refer to the core of the performance and is included in many agreements. However, the court does not find that the clause is unreasonably onerous according to the standards of reasonableness and fairness (article 6:233 Dutch Civil Code) because there was no deception and the possible loss cannot be attributed to intent, deliberate recklessness or gross negligence.

AMS Advocaten specialised in Dutch contract law

When concluding an agreement it is always essential to have the right and complete data. General or target data can result in misrepresentation, even if the other party explicitly pointed out the nature of these data. AMS Lawyers is very experienced in contract law and is more than willing to advise you in concluding a cooperation agreement.

Hidde Reitsma - Advocatenkantoor AMS Advocaten
Hidde Reitsma Hidde has a varied consultancy and litigation practice, focusing on corporate law and insolvency law. He frequently acts in proceedings before the Enterprise Chamber of the Court of Appeal in Amsterdam and in cases on directors’ liability. Hidde also advises on drawing up and negotiating contracts, mergers and acquisitions and joint ventures. Follow Hidde also on Google or LinkedIn. Hidde is available via e-mail and +31 (0)20-3080315.
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Most general terms and conditions include an exoneration clause. In this clause the user of the terms and conditions limits...

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