Liability limitation periods for hidden defects in consumer contracts
Maaike Berends - de Weerd
The Netherlands
by Maaike Berends - de Weerd
Liability limitation periods for hidden defects in consumer contracts are unreasonable and unfairly onerous according to the Amsterdam Court of Appeal. On 17 December 2024, the Amsterdam Court of Appeal issued a ruling that has implications for the construction sector. The ruling states that “the expiry periods for liability for hidden defects included in the AVA 2013 (two, five or ten years) have been deemed unreasonable and unfair to consumers by the Amsterdam Court of Appeal and must therefore be excluded for consumers” (see the original ruling in Dutch).
AVA 2013 and liability
Article 16.3 of the General Terms and Conditions for the Contract for Work 2013 (AVA 2013) regulates the contractor's liability after completion. In the event of a hidden defect that comes to light during the maintenance period as a result of a circumstance attributable to the contractor, the liability expires after a period of two years. In the event of a hidden defect that occurs after the maintenance period as a result of a circumstance attributable to the contractor, liability expires after a period of five years. If the latter defect is a serious defect, the expiry period is ten years. This is all calculated from the end of the maintenance period.
The dispute
On 23 December 2014, a consumer and a contractor entered into a building contract for the construction of a house, to which the AVA 2013 were declared applicable. The house was completed on 17 December 2015. No defects were found upon completion. The maintenance period referred to in Article 16.3(2) of the AVA 2013 expired on 17 January 2016. Subsequently, the consumer complained to the contractor about defects in the cement screed, the roof, and the bathroom tiling . The contractor invoked the expiry dates in the AVA 2013, on the basis of which it could no longer be held liable for defects.
In the legal proceedings, the question arose whether the expiry clause included in Article 16 of the AVA 2013 was unreasonably onerous or unfair (in view of European Directive 93/33/EEC on unfair terms in consumer contracts).
The court ruled that the clause was not unreasonably onerous, but the court of appeal ruled that it was. The contractor could therefore not invoke the expiry clause.
The court of appeal concluded that the expiry periods in the AVA 2013 were much more disadvantageous to consumers than those in the Civil Code. For example, a statutory limitation period can be interrupted, but an expiry period cannot. This means that legal proceedings must be initiated before the expiry period expires in order not to lose any rights. Furthermore, unlike the statutory limitation period of two years, these expiry periods can start to run before the defect is discovered. This puts consumers in a considerably worse position than if the statutory provisions were applied.
The court therefore ruled that the expiry periods in the AVA 2013 are unreasonably onerous for consumers and could therefore be annulled by consumers. The contractor cannot invoke the expiry periods in the AVA 2013.
Impact on the Dutch construction industry
These expiry periods are included not only in the AVA 2013 – almost all general terms and conditions used in the Dutch construction industry include expiry periods relating to liability for hidden defects. It is unclear to what extent this ruling will also apply to other agreements and general terms and conditions for consumers.
XLNC member firm Clairfort Attorneys-at-lawAmsterdam, The NetherlandsT: +31 30307 5465
Maaike Berends - de Weerd is an attorney-at-law and associate partner at Clairfort with over 15 years of experience in tenancy and construction law, both advisory and litigation. She assists property developers, construction companies, investors, municipalities and housing associations in real estate transactions and development. Contact Maaike.
