18 December 2019

Distribution agreement under Dutch law

Distribution agreements

Distribution agreements are not regulated in the Dutch Civil Code. A distribution agreement is an agreement in which the distributor and the supplier make agreements regarding the supplier’s products which will be sold by the distributor in a certain region. This often includes arrangements in relation to the term of the agreement, the exclusivity with which the distributor can sell products, the distributor’s territory, price and payment terms etc.

Terminating a Dutch distribution agreement

Either of the parties can terminate the distribution agreement. In most cases a distribution agreement will contain a termination clause that provides how and when the distribution agreement can be terminated. In case of serious failure in the performance of the distribution agreement by one of the parties, the other party may have the right to terminate immediately, even if normally a termination period would be required. Even if the distribution agreement is for an indefinite period and does not provide for termination, the distribution agreement may be terminated on the basis of Dutch case law. However, the supplier will be required to respect a reasonable termination period and grant compensation that is reasonable in view of the duration of the distribution agreement.

A distribution agreement can also be terminated by mutual consent.

Goodwill & damages

According to Dutch law the distributor has – in general – no legal rights to compensation of goodwill. This is because the customers remain the customers of the distributor upon termination of the distribution agreement.
As the distribution agreement is governed by the principles of reasonableness and fairness, it is possible that, although the agreement was lawfully terminated, damages may still be due. Damages that may have to be compensated are for example investments made by the distributor on the instructions of the supplier that cannot be earned back as a result of the termination.

Competition law

Please note that a supplier may grant an exclusive territory to the distributor, to the extent that the market share of the distributor and the supplier does not exceed 30%.

Dutch attorney in Amsterdam, specialized in distribution agreements under Dutch law

If you have any questions about an distribution agreement under Dutch law, please do not hesitate to contact Blenheim Attorneys in Amsterdam. We can assist in all kinds of issues regarding distribution agreements when Dutch law applies. Regarding the complexity of Dutch distribution law, we advise you to contact a lawyer before entering into a distribution agreement. Our lawyers can assist you in assessing the agreement, draft a distribution agreement or assist you in the termination of the distribution agreement.