WHAT IS AN AGENCY AGREEMENT?
A commercial agent under Dutch law is a self-employed tradesman who is commissioned to act as an intermediary for one or more other entrepreneurs or to conclude transactions on their behalf. Our Dutch lawyers in the Netherlands specialise in Dutch commercial agency law and will be happy to advise you on questions relating to an agency contract under Dutch law. More specific about compensation claims, commissions, drawing up commercial agency agreements, and concluding and terminating a commercial agency agreement. In the Netherlands, an agency agreement is often defined as an (‘agentuurovereenkomst’).
Commercial AGENCY contract UNDER DUTCH LAW
In essence, the role of the commercial agent is to facilitate or procure sales on behalf of the principal. The Dutch Civil Code (Burgerlijk Wetboek) defines an agency contract as a contract whereby one party, the principal, engages another party, the agent, and the agent agrees to act as an intermediary in the conclusion of contracts for a fixed or indefinite period of time and for remuneration and, where applicable, to conclude such contracts in the name and on behalf of the principal, without being the principal’s servant. A commercial agency contract under Dutch law is to be distinguished from a distribution contract in the Netherlands. In a distribution contract, the distributor concludes contracts with third parties in his own name and for his own account.
LEGAL PROVISIONS FOR AGENCY CONTRACTS IN THE CIVIL CODE
If the principal and the commercial agent have not made a choice of law and the commercial agent has the agency in the Netherlands, the courts in the Netherlands generally tend to apply Dutch law. The Dutch courts also tend not to apply a law chosen by the commercial agent and the principal if that law has no real connection with the relationship between the parties.
Dutch law contains a special legal regime for an agency contract under Dutch law. While Dutch law adheres to the principle of freedom of contract, a large part of the commercial agency law is mandatory. This means that the parties are not allowed to deviate from these provisions. Contractual provisions that purport to deviate from mandatory provisions are void and have no legal effect. A Dutch lawyer can assist you in drafting an agency agreement that complies with the mandatory provisions. MAAK Advocaten will be happy to assist you with your commercial agency agreements.
WHAT PROVISIONS DO YOU MAKE IN AN AGENCY AGREEMENT?
Under Dutch commercial agency law, the agent does not have to reside in the Netherlands, have an office or be registered in the Netherlands. A commercial agent with a business organisation in the Netherlands is legally obliged to be registered in the commercial register of the chambers of commerce in the Netherlands. If the principal does not have an office in the Netherlands, the commercial agent is also obliged to register the principal in the Trade Register. If the principal has an establishment in the Netherlands, he is directly obliged to register.
As a rule, agency agreements do not need to be in writing. However, there are clauses that must be in writing in order to be effective. An English-speaking lawyer in the Netherlands can assist you in drafting an effective agency agreement in order to preserve the legal effectiveness of all clauses.
NON-COMPETE CLAUSES UNDER DUTCH LAW
Non-compete clauses are often included in commercial agency agreements. However, they are only legally effective if they are concluded in writing and are limited to less than two years. A non-competition clause must be limited to the goods and/or services and the territory of the commercial agent. If the effects of a non-competition clause in an agency agreement are considered unfair or disproportionately detrimental to the agent, the court may annul or mitigate the effects of a non-competition clause in an agency agreement.
COMMISSION UNDER DUTCH COMMERCIAL AGENCY LAW
Dutch agency law does not expressly regulate the amount of commission to be paid to the agent; if no specific commission has been agreed between the principal and the agent, the agent is entitled to a reasonable commission considering the specific circumstances.
TERMINATION OF AN AGENCY AGREEMENT UNDER DUTCH LAW
An agency agreement may be concluded for a fixed period or for an indefinite period. If the agency agreement has been concluded for a fixed period, termination during that period may only occur if such prior termination has been agreed in the agency agreement. If an agency agreement concluded for a fixed period continues beyond that period (and no other agreements are made between the principal and the agent), the agreement shall be deemed by operation of law to be an agreement for an indefinite period.
An agency agreement for an indefinite period of time usually contains a provision on termination. In most cases, such termination provisions include the regulation of compliance with a certain notice period. Under Dutch agency law, the minimum notice period varies between one and three months, depending on the duration of the agency agreement.
COMPENSATION CLAIMS UNDER DUTCH LAW
When a commercial contract is terminated, the commercial agent is entitled to a compensation payment (‘goodwill’) in the Netherlands. However, this is only the case if the commercial agent has acquired new customers or expanded existing business relations, from which, from an economic point of view, there are still advantages for the entrepreneur after the termination of the agency agreement and payment of compensation is appropriate.
In accordance with the agency provisions in the Dutch Civil Code, this compensation (goodwill) may not exceed the sum of the average annual commission during the last five years (or, if the agency agreement lasted less than five years, the annual average during the actual period).
TERMINATION of a commercial agency contract under Dutch law
Termination of a commercial agency contract under Dutch law may be immediate if there is an urgent reason. However, if the Dutch court finds that there was no such urgent cause, it is possible that the terminating party will be liable to pay damages. Our Dutch lawyers in the Netherlands have acquired expertise in commercial agency law over the years and are happy to assist you with the conclusion of an agency agreement or with questions regarding commissions, terminations and severance payments.
LIMITATION OF GOODWILL CLAIMS IN THE NETHERLANDS
The statutory limitation period under Dutch law is 5 years,. Only in the case of a claim due to invalid termination of an agency agreement does a shortened period of one year apply. The limitation period in the Netherlands can be legally suspended or interrupted by a demand for payment.
Dutch LAWYER SPECIALIzED IN COMMERCIAL AGENCY contracts
Our team of Dutch contract lawyers in the Netherlands (Amsterdam) have a strong reputation in (international and domestic) commercial agency contracts. Would you like to obtain advice on an agency dispute with a Dutch agent or principal, the annulment or enforcement of an arbitral award, or would you like to know more about the best clauses in commercial agency contracts under Dutch law? Please contact our Dutch lawyer specialized in commercial agency contracts in the Netherlands, Remko Roosjen, or one of our other Dutch lawyers in Amsterdam.