“Subject to all rights and defenses” under Dutch law
Words Matter. Oh yes, words are important. Many will agree, especially lawyers. After all, we have made our profession of – mainly – written products, such as the reproaching letter, a notice of default and of course also the defense against such ‘legal violence’.
Correspondence with a legal message is often intended as a precursor to the next phase of a dispute. This next phase cannot always be avoided. It can be very important to mention the words ‘subject to all rights and defenses’ in the (early) correspondence. The importance of these words should not be underestimated in my view.
Blog words matter
In a series of blogs I try explaining why lawyers are so sensitive to typical additions to legal language, such as correspondence and contracts. I like – and find it important – to clarify why people in my profession can argue so loudly about words whose importance is often not immediately clear, but which words can have major consequences. Non-lawyers often think this is nonsense, which I also understand. But a good lawyer can distinguish the main issue from the side issues and also recognize when small words (can) be the main issue. For example, a reservation in a letter can make all the difference.
In an earlier blog I already explained how you can save € 5.99 million by using the words ‘for whatever reason’ to include in a settlement agreement. Words Matter.
Why include “subject to all rights and defenses”?
In short: because it costs you nothing and can yield (or save) a lot. It doesn’t really mean much more than that you don’t want to give up any rights or defenses against a (counter) claim with your letter, whilst of course you want to make your point, as firm as possible.
This reservation can also be wise for a lawyer (and anybody else) if the facts of the case are not yet fully clear. In some cases, facts only come to us in dribs and drabs and sometimes filtered. Clients usually turn out to be very human in their way of communicating. Then it is good to be able to go back on your own written word.
So the question is: is this really relevant? Or phrased differently: will this really be taken into account by the court if you want to invoke the proviso that you have not given up your rights and defenses. Even if you have previously explored other directions for a solution. In my experience it is. A judge is generally reluctant to assume that rights and defenses are readily surrendered and then this reservation certainly helps. It has been thrown to me several times during hearings that I take a (slightly) different position before the judge than in the previous negotiations about a solution. Almost every time I was helped by the judge because he had seen that rights and defenses were expressly reserved. So you keep room to maneuver.
Difference between reservation of all rights and of all rights and defenses
It’s a bit lame, but the difference is only the caveat that you don’t state defenses against a statement or a claim with your own statements. That in itself is possible if you cannot be blamed at all in a conflict against which you will ever have to be able to defend yourself. An example is a straightforward collection of a claim.
You(r lawyer) must be pretty sure that you will not have to defend yourself against any claims if only the phrase “all rights reserved” is used. I do it very occasionally when I am very sure indeed. If in doubt, include the entire caveat. It is a small effort and -possibly- a good outcome.
Is statute of limitations interrupted by reservation of all rights and defenses?
The horrid lawyer answer is: it depends (but probably not). According to the ruling of the Dutch Supreme Court the statute of limitations can be interrupted by unambiguously reserving your right to performance. In the event of a (pending) conflict about an agreement, a discussion can take place about a solution, without immediately wanting to follow the precise text of that agreement (i.e. formally demanding performance). But if you still want to be able to do so later and sue for performance of the agreement, it is wise to make this known in writing in good time. Then the statute of limitations is suspended from that moment.
Because the Supreme Court speaks of unambiguous, it is not enough in my view to just put the sentence ‘all rights and defenses reserved’ above or below a letter (or email). That in itself will most likely not stop the statute of limitations under Dutch law. In this sense, also the High Court of Arnhem-Leeuwarden Court ruled.
Words matter
Clear reservations in writings and negotiations can therefore be very important, even if that is a standard text above or below a letter or email. It really can be the difference between keeping your legal options or giving them up.
For a good Dutch lawyer to resolve conflicts, you can contact Penrose in Amsterdam, the Netherlands via info@penrose.law or +31 20 2400710. This blog was written by Dutch business lawyer Hans Klaver, who can be reached via h.klaver@penrose.law.
Law firm Penrose, Amsterdam.
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