Introduction
Identifying the correct contracting party to an agreement is essential for performance, claims and other legal consequences you wish to rely on.
It is therefore important to check who the other contracting party actually is. That is not always the person you have had all sorts of discussions and made arrangements with. There can be a difference between that person and the party you are actually entering into business with. Mistakes on this point become problematic when a party fails to honour the arrangements and you want to compel that party to fulfil its obligations — for example, when payment of your invoice is not forthcoming, or when a contractor performs defectively when building your house and you want the damage remedied. In that case a formal notice of default is needed, but it can only be addressed to the counterparty that signed the agreement. Otherwise, such a claim has little chance of success, as this case shows.
Case
VDGroep Beveiliging was engaged to provide security for a three-day event. After completing the work, VDGroep sent an invoice to the invoice address for the organiser provided by an employee. When payment failed to materialise, VDGroep sent the employee a demand for payment of the invoice. The organiser subsequently decided to pay only part of the invoice, taking the view that VDGroep had fallen short in its performance. According to the organiser, the security staff had arrived at the event two days late, causing the event to start later than planned. This resulted in lost drinks revenue. In addition, the security staff had treated various visitors improperly, as a result of which the event had offered them free tickets to another festival by way of compensation. The organiser had set off this amount of damage against the invoice amount.
VDGroep subsequently brought legal proceedings against the employee, claiming payment of the outstanding amount plus interest, as well as collection costs. The court then ruled that the employee was not obliged to pay the invoice, because he was not a party to the agreement. Applying the Haviltex standard, the court held that it was sufficiently clear to VDGroep that it had concluded an agreement solely with the organiser. For instance, the employee had twice asked the company to put the invoice in the organiser’s name, the organiser himself had paid the invoice, and the name of the event matched the name of the organiser. VDGroep’s claim against the employee therefore failed, whereas it would have succeeded had it been directed against the organiser.
Conclusion and tip!
In business-to-business (B2B) transactions, always check the trade register to see whether your contact person or the person you are dealing with is registered as an authorised representative, and if not, ask for the written power of attorney from the contracting party that will ultimately sign the agreement. Also check whether the trade name of the party you are doing business with is actually registered by the party that is going to sign. Then always note the Chamber of Commerce number of the correct BV in the description of the contracting party at the top of the agreement. This number is the only unique identifier of that contracting party! That way, no discussion can ever arise about it afterwards.
Always have your contracts drafted or reviewed by experts! The lawyers of The Legal Company specialise in and are happy to help you draft or review contracts/agreements. Contact us via info@thelegalcompany.nl or call directly on 020 345 0152.