You've probably experienced it: a contract you meant to cancel, but it was silently renewed because you missed the notice period. Frustrating, and expensive. But is that actually allowed?
The short answer: yes, in most cases it is. But there are exceptions every SME owner should know about.
What is freedom of contract?
In the Netherlands, the principle of freedom of contract applies. This means two parties in a business agreement are free to decide what they agree on, including the duration, the notice period, and the conditions for renewal.
Consumers benefit from a wide range of legal protections. But the moment you sign a contract as a business with another business, most of that protection falls away. Both parties are assumed to be professional enough to pay attention to the terms themselves.
The main rule: tacit renewal is permitted
For most B2B agreements, tacit renewal is entirely legal. Think of:
- Maintenance contracts (elevators, HVAC, cleaning)
- Software licences and SaaS subscriptions
- Vehicle lease agreements
- Commercial property rental agreements
- Security services contracts
If the contract states that it will automatically renew for another year if not cancelled in time, you're bound by that. The supplier doesn't even have to remind you, unless that was explicitly agreed.
That's why you need to actively monitor your notice periods. It's not the end date that matters, but the last date you can cancel.
The exceptions: where you are protected
In a few specific sectors, the legislator or the industry itself has intervened to prevent unreasonable renewals. These are the three most important ones:
| Sector | Regulation | Your rights after the initial term |
|---|---|---|
| Telecom | Business Contract Duration Act | After the initial term (typically 1 or 2 years), the contract can be cancelled monthly, even if it was tacitly renewed. |
| Insurance | Insurance Industry Code of Conduct | After the initial term (max. 3 years), the policy may only be renewed for a maximum of 1 year. During that renewal, you can cancel daily with 1 month's notice. |
| Energy | General terms and conditions | Many business energy suppliers now apply a 1-month notice period for SME contracts after the initial fixed period. |
Good to know: this protection only applies after the initial contract term. During the initial period, you're bound by what you signed.
The 'reflexwerking': consumer protection for small business owners
There's a legal grey area that's interesting for small business owners: the so-called reflexwerking (reflexive effect).
Normally, consumer protection only applies to individuals. But courts sometimes extend that protection to small business owners (sole traders, one-person companies, small partnerships) when the purchase falls outside their normal business operations.
When can reflexwerking apply?
- You're a small business owner, not a large company with a procurement team
- The purchase falls outside your core activity. For example: a hotel owner taking out a subscription to a gym magazine
- You have no more knowledge of the subject than an average consumer
When does it probably not apply?
- You're a professional buyer acting on behalf of an organisation
- The purchase falls within your normal business operations. For example: a hotel owner signing a maintenance contract for elevators
- You have specific expertise about the type of contract
Reflexwerking is not a guarantee. It's an assessment a judge makes on a case-by-case basis. But it's good to know this option exists, especially if you're a small business owner who entered a contract you didn't actually want renewed.
How to protect yourself as an SME owner
You can't always rely on legal protection. But you can make sure you're never caught off guard by a tacit renewal again:
Record every notice period, not the end date, but the last cancellation date. That's the moment you need to act.
Set automatic reminders, and not two weeks in advance, but at least three months. That gives you time to re-quote the market or negotiate.
Check the renewal clause before you sign. How long will the contract be renewed for? The same term, or one year? Is there an escape clause?
Assign an owner to every contract. Someone needs to be responsible for monitoring it. Without clear ownership, everything falls through the cracks.
Track supplier performance. If you decide to renew, do it consciously. And if you decide to cancel, have the facts ready to negotiate.
Tacit renewal is a reality in business contracts. The law protects you in a few places, but for the most part, you're responsible yourself. Good contract management isn't a luxury. It's the only way to stop leaving money on the table every year.
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