At the height of tulip mania, most of the trading contracts didn't involve the actual exchange of goods and became purely speculative. For all the parties involved, buyers and seller actions were fueled with the expectation that a succeeding sale could be at an ever higher price.
But at one point buyers began to wonder if the rising prices could be sustained and first signs of doubt that more tulips would be grown, thus increasing the supply appeared. In the first week of February 1637, investors were not willing to pay higher prices anymore so the market started to collapse. There was suddenly an enormous uncertainty regarding the contract obligations and what would happen when the bulbs were lifted for delivery.
Buyers were thought to default on their promise to pay for what now were much devalued bulbs. Later in February 1637, traders sought to enforce deals made before the end of November the previous year, when prices had sharply increased, although later transactions could be nullified if the buyer paid a fine of ten percent of the purchase price.
No agreement could be reached nor could such a plan even have been enforced. Therefore in March, it was suggested that any trade in flowers since planting time the previous September be nullified.
High Court intervention
The problem became so great that high court took the whole situation under advisement and eventually determined that all transactions remain in force and that parties resolve matters amicably between themselves, leaving state courts as a last resort. This prompted the official authorities in Haarlem to prohibit any action against those who might owe money.
It's a fair guess they were protecting their own interests with the decision, some of them being heavily involved in tulip trading. A year after the crash, they established a commission to deal with the problem, which declared that contracts which came before it would be settled with a fee of 3.5% percent, the same amount as the fine that typically was charged to compensate the seller and excuse the buyer when a transaction was canceled.
In such situation the seller was obliged to keep bulbs now worth much less and the buyer hoped of paying nothing. Basically, everybody who was involved lost. The tulip remained the same beautiful flower, however, now it had a bad reputation. There was no longer much desire for them so the trading continued in low volume and planting of the new bulbs practically stopped. In time, people forgot about this grand crisis making tulip a national symbol of Netherlands.