Default by IT supplier

IT projects can be extremely complex and time consuming. Therefore, it is no surprise that during the project, problems occur on a regular basis. Either the delivery is not due in time, costs appear to be higher than expected or the quality of the item delivered does not meet the requirements.

Once you as a customer signal such difficulties, it is important to notify your supplier of your dissatisfaction or give a notice of default in a correct manner, in due time. A notice of default serves to offer the supplier a last, genuine opportunity to adequately perform his obligations under the agreement. Furthermore, in many cases is a notice of default a prerequisite to terminate the agreement or to be able to claim damages.

A correct notice of default should at least meet the following requirements:

  1. A notice of default must be done in writing;
  1. The obligations on the supplier’s side must be described in sufficient detail;
  1. The supplier needs to be given a reasonable period of time during which he should perform the obligations on his side;
  1. The consequences of non-performance within the set period of time must be set forth. For instance, a liability claim.

Is sending a notice of default required in all cases? No, the law states that in some cases, a notice of default can be omitted. For example, when a fatal (delivery)deadline has passed, your supplier is unable to perform his obligations (permanent impossibility) or the supplier has indicated to be unwilling to perform his obligations. Nevertheless, the prerequisite of a notice of default is often included in contracts or general terms and conditions in case termination or the ability to claim damages is desired.

recent IT dispute judgment of the district court of Rotterdam has confirmed the importance of a correct and timely notice of default. In this judgment, the permanent impossibility of the supplier was not accepted by the judge as the notice of default had not been sent in due time. Therefore, the agreement was deemed not to be legally terminated by the customer and the claim for damages was rejected.

Would you like to receive more information about his topic or advice relating to your IT dispute? Please do not hesitate to contact Tom de Wit or Huub de Jong.