Dutch Civil Code

Book 7A Particular Contracts

Title 7A.5 Contract of sale on instalments

Section 7A.5.1 General provisions for a contract of sale in instalments

Article 7A:1576 Definition 'contract of sale on instalments'
- 1. A contract of sale on instalments is a sale contract under which parties have agreed to pay the purchase price in instalments of which two or more become due and demandable after the sold thing is delivered to the buyer.
- 2. The contract cannot have effect before parties have determined the price which is to be paid by the buyer.
- 3. Any contract purporting the same, whatever its form or the name under which it is entered into, is deemed to be a contract of sale on instalments.
- 4. A contract of sale on instalments within the meaning of the law, cannot relate to:
a. immovable property;
b. seagoing ships of which the gross volume amounts at least twenty cubic meters or of which the gross tonnage amounts at least six, and that are registered or can be registered in a public register as meant in Section 3.2.1;
c. inland navigation vessels which are registered, or must be registered but nevertheless are not, in the public registers as meant in Section 3.1.2;
d. aircraft registered in public registers as meant in Section 3.1.2.
- 5. What is provided in the present Title (Title 7A.5) shall apply accordingly to property rights (valuable rights), not being registered property, to the extent that this is in conformity with the nature of that right.

Article 7A:1576a Mandatory law
It is only allowed to derogate from the provisions of the present Title (Title 7A.5) if and to the extent that this results from the present Title.

Article 7A:1576b Stipulated damages or penalties
- 1. Stipulations through which the debtor, in case he may not perform one of the obligations from the contract, is forced or may be forced to pay a certain amount as damages or penalty, can only be made in writing.
- 2. If the court thinks that the stipulated or imposed damages or penalty is excessive, it may reduce or cancel it.

Article 7A:1576c Earlier moment on which the instalments become due and demandable
- 1. A stipulation through which the instalments become due and demandable earlier as penalty for non-performance by the buyer of the payment of instalments, can be effectuated only when the arrears in respect of one instalment at least amounts one tenth of the entire purchase price or when the arrears in respect of more instalments jointly amounts at least one twentieth of the entire purchase price.
- 2. For the purpose of the present Article, the entire purchase price is the total sum of all instalments which the buyer has to pay in the performance of the contract.
- 3. Article 7A:1576b, paragraph 2, does not apply in such event.

Article 7A:1576d Formal notice to perform
A stipulation as meant in the previous two Articles can be invoked only on account of a non-timely payment if the debtor, after he has been formally notified to perform, remains negligent in the compliance with his obligations.

Article 7A:1576e [repealed on 25-05-2011]

Article 7A:1576f Seller’s right to periodical payments arisen from the buyer’s employment contract
- 1. A transfer, the establishment of a pledge or any other juridical act due to which the buyer grants the seller or a third party any right to his wages, pension payments or other periodically paid income arisen from an employment contract, may in the case of a contract of sale on instalments relate only to payments which the buyer has to make on a regular basis and for costs, and also for already due and demandable debts.
- 2. The juridical act meant in paragraph 1 shall have no effect other than in respect of the instalments which become due and demandable in conformity with a payment scheme inserted in a written contract and the costs incurred accordingly, each time to the amount due and demandable at that moment.
- 3. Furthermore, it is required that the buyer, after he has been formally notified to perform, has been negligent still. Only the instalments and costs for which the formal notice is given and those that will become due and demandable after that, are taken into account when ascertaining the effect of the aforementioned juridical act.
- 4. A juridical act as meant in paragraph 1 shall have no effect in regard of the person who is obliged to make the regular payments arisen from the employment contract, before he has been informed in writing of the formal notice of performance given to the buyer and of the scheme for regular payment of the instalments and costs and what has been paid in this respect already, or before all this has been acknowledged in writing by him. Payments made in good faith by him after he has received or acknowledged the aforementioned information shall discharge him towards the buyer.

Article 7A:1576g Right to revoke a procuration
A procuration (power of attorney) granted by the buyer for the collection of wages, pension payments or other periodical debt-claims arisen from his employment contract may, regardless its form or name, be revoked at all times.

Section 7A.1.2 Hire-purchase contract

Article 7A:1576h Definition 'hire-purchase contract'
- 1. A hire-purchase contract is a contract of sale on instalments*) under which parties have agreed that the right of ownership of the sold thing shall not pass merely upon delivery, but only after the fulfilment of the condition precedent that the buyer has fully paid up what he is due on the basis of the hire-purchase contract.
- 2. Any contract purporting the same, entered into either as lease (rent) or in any other form or under any other name, is deemed to be a hire-purchase contract.
- 3. Hire-purchase includes the contract under which a third party, in relation to a sale contract between the seller and the buyer, grants a credit to the buyer and acquires the right of ownership of the sold thing as long as the buyer has not repaid that credit to him.

*) This implicates that a hire-purchase contract within the meaning of the present Section cannot relate to things as mentioned in Article 7A:1576. Therefore, a specific Act has been issued in regard of hire-purchase contracts relating to immovable things. It implicates furthermore that the provisions of Section 7A.1.1 for contracts of sale on instalments apply as well to hire-purchase contracts as far as the provisions of Section 7A:1.2 do not indicate otherwise.

Article 7A: 1576i Formal requirements for a hire-purchase contract
- 1. A hire-purchase contract is entered into by authentic (notarial) or private deed that meets the requirements set under Article 7A:1576j.
- 2. The same applies to contracts that change or add an existing contract in such a way that, as a result, a hire-purchase contract has come into existence.
- 3. Where a hire-purchase contract is entered into by private deed, that deed must be drawn up double, if the buyer requests so.
- 4. The double private deed or, when no double has been drawn up, a certified copy thereof or a copy signed by the seller, shall be provided to the buyer as soon as possible after the conclusion of the contract.
- 5. The buyer may at all times demand further copies against payment of the relevant costs.

Article 7A:1576j Content of a hire-purchase contract
- 1. The hire-purchase deed must mention the entire purchase price as referred to in Article 7A:1576c, a scheme for regular payment as referred to in Article 7A:1567f and the stipulations with respect to the retention of title and the transfer of ownership.
- 2. In the situations meant in Article 7A:1576h, paragraph 2 and 3, the similar data are deemed to take the place of the data meant in paragraph 1.
- 3. In the absence of a deed which meets all the aforementioned requirements, the contract is deemed to be not a hire-purchase contract, but a contract of sale on instalments without the stipulation that the right of ownership of the sold thing shall not pass merely by delivery.

Article 7A:1576k Elected domicile
A buyer who, when he enters into the hire-purchase contract, has his actual domicile in a municipality in the Netherlands, cannot elect a domicile, except for the situation where he may not have any known actual domicile in that municipality.

Article 7A:1576l Obligations of the seller
- 1. The seller must deliver the sold thing to the buyer by giving him actual control over that thing. The provisions of Sections 7.1.1, 7.1.2 and 7.1.3 apply accordingly to the other obligations of the seller.
- 2. Where the seller transfers or encumbers the thing after it has been delivered under the hire-purchase contract, this shall have no effect to the detriment of the buyer.*)

*) After the sold thing has been actually handed over to the buyer, the seller may still, as being the owner thereof until full payment of the purchase price has been obtained, legally deliver that thing to a third party or establish a pledge or usufruct on it on behalf of someone else, even though the thing is actually under control of the buyer. Such legal delivery or encumbrance, that cannot be supplemented by the handing over of the thing to the third party, does not harm the rights which the buyer derives from the hire-purchase contract. Since he already has the thing under his control, third parties were not allowed, according to law, to assume that the seller was entitled still to dispose of it legally.

Article 7A:1576m Right of use of the delivered thing / passage of risks
- 1. The buyer who has the actual control over the thing after it has been delivered to him under the hire-purchase contract, may use it even before he acquires the right of ownership thereof.
- 2. He may use the delivered thing in accordance with its intended purpose.
- 3. He may not change its shape or arrangement; neither is he allowed to lease it out or to grant someone else the possibility to enjoy or use it.
- 4. As of the moment of delivery of the thing, the risks involved are for account of the buyer. Article 7:10, paragraph 2, 3 and 4, apply as well.
- 5. It is possible to derogate from the previous provisions by agreement. With respect to a consumer sale contract, however, it is not possible to derogate to the detriment of the buyer from paragraph 4.

Article 7A:1576n Fruits (benefits) derived from the delivered thing
- 1. The fruits (benefits) of the thing produced during the time that its in use of the buyer, belong to him. As far as the hire-purchase deed stipulates differently, the buyer shall nevertheless have the right to enjoy and use these benefits (fruits), unless agreed otherwise.
- 2. During the time that the thing is in use of the buyer and irrespective of the moment that his right of use ends, the civil fruits (benefits) are regarded to be acquired by the buyer on a day to day basis, each time as of the moment that they become due and demandable, unless the parties have agreed otherwise.
- 3. The obligation of the buyer to return the thing that has been delivered to him under the hire-purchase agreement*) includes the surrendering of all fruits (benefits) to the seller that belong to the seller.

*) Such obligation shall arise only when the seller has the right to claim the delivered thing back by virtue of a non-performance of the buyer.

Article 7A:1576o [repealed]

Article 7A:1576p [repealed]

Article 7A:1576q Rescission of the hire-purchase contract / return of the delivered thing
A rescission of the hire-purchase contract or the return of the thing that is under control of the buyer under the hire-purchase contract, invoked by the seller by virtue of a stipulation made for this purpose in the event that the buyer has not performed his obligations in time, cannot be invoked or claimed, unless the buyer, after having been formally notified to perform, still remains negligent in the compliance with his obligations.

Article 7A:1576r Preliminary relief order to return the delivered thing to the seller
When the seller has the right to claim the rescission of the hire-purchase contract or the return of the thing that has been delivered to the buyer under the hire-purchase contract, then the Subdistrict Court may, upon the request of the seller who has a reasonable interest in requesting so, order the return of the thing by way of a preliminary relief which is enforceable immediately.

Article 7A: 1576s Return of the delivered thing leads to a rescission of the hire-purchase contract
If the thing that has been delivered to the buyer under the hire-purchase contract is taken back by virtue of a stipulation made for this purpose in the event that the buyer has not complied with his obligations, then this shall result in the rescission of the contract, unless parties have agreed otherwise.

Article 7A:1567t Obligation to equalize the advantages of a rescission
If a rescission of the hire-purchase contract on account of non-compliance by the buyer, has the result that the seller enters into a better financial position than he would have been when the contract would have remained in force, then this advantage must be equalised in full.

Article 7A:1576u Buyer’s right to withhold the return of the delivered thing
If the buyer, in the case of a rescission of the hire-purchase contract, has a right to any repayment, he may be authorized by the court to withhold the return of the thing he has to give back, until the seller has paid to him what he is due to him or has provided sufficient security (collateral) for this debt.

Article 7A:1576v Buyer’s right to pay up still
- 1. If the thing that has been delivered to the buyer under the hire-purchase contract has been taken back by the seller because one or more due and demandable instalments have not been paid, and this has occurred without any prior intervention of the court, then the buyer is entitled to regain the thing within fourteen days after it was taken from him by paying up the instalments which are due and demandable at that moment and by paying the interest, financial penalties and costs indebted at that moment.
- 2. Where the hire-purchase contract might have been rescinded already, a payment as meant in the previous paragraph shall have the effect that the rescission is made undone.
- 3. Where a situation as referred to in paragraph 2 repeats itself, the buyer shall only have the right to pay up once more against payment of the entire purchase price
- 4. Except when the entire purchase price is paid, the seller is allowed to deny the buyer’s right to pay up if there are circumstances which may lead to the application of Article 7A:1576r.

Article 7A: 1576w Court order to return the delivered thing to the seller
The judgement in which the buyer’s obligation to return the thing that was delivered to him under the hire-purchase contract has been established or in which the hire-purchase contract has been rescinded, may include an order to return that thing to the seller.

Article 7A:1576x Court order establishing the financial value of the thing to be returned
- 1. The judgement which includes an order to return the thing that was delivered to the buyer under the hire-purchase contract, may establish the financial value of the thing to be returned.
- 2. In such event the enforcement (by the seller) may also take place by an action for the recovery of the established value.