When you enter into a contract, you have certain expectations and agreements must be met. Often these conditions are complied with completely, so that the contract is completed properly. Sometimes the agreement is not fully complied with, causing a breach of contract with damage. Consider transferring a mortgage or getting fired. What does this breach of obligation entail and what consequences can be attached to it?
Breach of contract
- What does a contract entail?
- Dismissal for business reasons
- Payment arrears
- Monthly costs for home purchase
- Refinancing a mortgage
- Non-compliance with delivery (default)
- Problems with oral contracts and breach of contract
What does a contract entail?
Entering into a contract means that an agreement is entered into between two or more parties. These agreements must be met because both parties will deliver in accordance with the conditions. One party wishes to receive something from the other and there is compensation in return. This can be entered into both orally and in writing, but by putting it in concrete terms on paper, the agreements can always be proven. This prevents problems and provides the opportunity to obtain the right through legal action. The contract therefore ensures that the signed parties must fulfill mutual obligations so that both can benefit from it. But there are circumstances where this does not apply. How can there be a breach of contract?
Dismissal for business reasons
If a company finds itself in difficult economic circumstances, it can lead to reorganization or layoffs. This attempts to eliminate red figures so that the company does not go bankrupt. It means that employees are put on the street. Employees with a permanent contract assume that they will remain employed for a long time, because the employment contract has been entered into for an indefinite period. Because the employer no longer wishes to retain the employee, the contract is terminated by means of a termination agreement. In order to reach an agreement with the employee, a severance payment will be important to somewhat compensate for the damage suffered by the employee. When dismissing, the statutory notice period of one month for every five years worked must always be observed. If there is a collective dismissal, the employer is obliged to apply the reflection principle, whereby those dismissed are evenly distributed across age categories and organizational units.
Payment arrears
Being late with a mandatory payment means that the other party suffers a loss. It can arise from loss of profit, failure to pay for product purchases, failure to remit rent, etc., creating a contract conflict. If the amount due increases quickly, escalates into a general dissatisfaction or worse, a bailiff or collection agency will be called in. This party still tries to claim the amount (including additional activation costs) from the debtor. Please note that there is an increased chance of obtaining a code from the Credit Registration Bureau (BKR), which may make it less likely that you will be able to obtain a loan or mortgage in the future.
Monthly costs for home purchase
A significant payment arrears are caused by the mortgage obligation. It may happen that one or both partners are dismissed, as a result of which the costs can no longer be paid. This means that the mortgage provider sees a decrease in interest and repayment income. This circumstance may give rise to a forced sale. The homeowner can no longer meet the obligations and therefore the bank is entitled to the collateral. You can also insure yourself against this unexpected circumstance by having the mortgage fall under the conditions of the National Mortgage Guarantee. The Guarantee Fund provides the opportunity to:
- to receive a temporary discount on the monthly mortgage costs, so that the poor period can be bridged;
- a waiver of the residual debt in the event of forced sale, provided it is caused by dismissal, death or divorce.
It is therefore always a good idea to conclude a mortgage contract under the conditions of the NHG to cover the consequences of contractual problems.
Refinancing a mortgage
When refinancing a mortgage, a major cost item can be the penalty interest. You may be considering canceling an old mortgage contract to benefit from a more favorable interest rate. The previous mortgage provider therefore misses out on interest income and this can be charged as an interest penalty. The contract is not continued until the end of the term and therefore a claim can be made. If you are considering transferring the mortgage, always read the conditions of the old mortgage contract. You must reimburse a large part or all of the unpaid interest. Please note that this can be quite expensive, so a numerical financial assessment is always necessary. So have everything calculated so that you know what consequences refinancing the mortgage will have.
Non-compliance with delivery (default)
Some purchased products are delivered to your home. This can be done via an online order, but also if a large appliance or piece of furniture is delivered afterwards. To this end, the customer has already paid and a delivery contract has been entered into. Sometimes it may happen that delivery is not made or you receive a substandard product. This may cause a conflict with the supplier, because payment has been made but no delivery has been made. The supplier always has the obligation to deliver a high-quality product within the agreed delivery period. If there are delays, it may result in damage to the customer for which the supplier is responsible.
Problems with oral contracts and breach of contract
With agreements or agreements where the interests may be high, it is never wise to enter into a verbal contract. The chance of a party not delivering is then always present. Borrowing a small amount to a friend is of course no problem, because it is quickly repaid. This is a different story if you want to take out a private loan, where you transfer a share of your financial assets into the hands of someone else. There is a real chance that the money will not be returned despite mutual agreements having been made. Provide clarity and prevent problems in the event of breach of contract by entering into a written contract.
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