5 Key Considerations for a Distribution Agreement under Dutch law

When concluding a distribution agreement in the Netherlands, you must address exclusivity arrangements, competition law compliance, termination conditions, pricing agreements, and the obligations of both parties. These elements determine the legal validity and commercial balance of your collaborative relationship with distributors.

A distribution agreement under Dutch law governs the business relationship between supplier and distributor whereby products are resold for the distributor’s own account and risk. Unlike an agency agreement, the distributor operates under their own name and bears the commercial risk themselves. This legal structure therefore requires careful attention to contractual details that protect your business interests.

Approximately 65% of Dutch producers work with multiple distributors simultaneously, where unclear contracts regularly lead to disputes over territorial rights and sales authority. Entrepreneurs often forget to include essential provisions, which later results in costly legal proceedings. Legal advice prevents you from working with a contract that does not fit your actual distribution relationship.

What Legal Form Suits Your Distribution Relationship Under Dutch Law?

The designation of your Dutch agreement determines which rights and obligations apply legally, regardless of what you call the contract. A ‘cooperation agreement’ that factually functions as a distribution agreement falls under the conditions of a distribution relationship according to the Dutch Civil Code.

Companies often choose friendly-sounding terms such as cooperation agreement, while the actual relationship constitutes a distribution agreement. However, this choice carries legal consequences. If your contract factually describes an agency agreement but you name it differently, the mandatory provisions for commercial agents still apply. This means, for example, that a commercial agent claims compensation for clientele after termination, even when you attempt to prevent this by using a different contract name.

Therefore, you first analyze the actual nature of the collaboration. A distributor purchases products in their own name and resells them independently. A Dutch commercial agent mediates on your behalf between your company and end customers without becoming the owner of the products themselves. Dutch courts assess the factual situation, not merely the contract title. Moreover, an incorrect agreement creates uncertainty about liability, warranty obligations, and termination rights.

Consequently, choose the correct contract form before you begin negotiations. Include concrete agreements about who bears the commercial risk and under whose name the sale takes place. For a distribution relationship, this means the distributor operates completely independently and remains solely responsible for after-sales service and customer relations.

How Do You Regulate Exclusivity Without Violating Competition Law in the Netherlands?

An exclusive distribution agreement in the Netherlands grants your distributor the sole right to sell products within a specific territory or for a particular customer group. This arrangement protects distributors against mutual competition and motivates them to invest in market development. Furthermore, suppliers use exclusivity to bind strong regional partners who contribute local market knowledge and sales networks.

However, Dutch and EU competition law sets boundaries for exclusivity arrangements. Article 101 of the EU Treaty on the Functioning prohibits cartels and agreements that restrict free competition. Nevertheless, an important exception exists: when the combined market share of supplier and distributor within the European Union remains below 15%, you may agree on exclusivity. You calculate this percentage by combining the distributor’s share in total purchases from suppliers with the supplier’s share in product sales on the market.

With cross-border distribution, you rarely exceed this 15% threshold, making exclusivity usually legally permissible. Despite this latitude, market division remains always prohibited, even when your combined market share stays below the threshold. For example, you may not agree that distributor A only supplies hospitals while distributor B exclusively serves private individuals, when this artificially divides the market.

Practical Agreements About Exclusivity

Formulate exclusivity specifically in your contract. For instance: “Distributor X obtains the exclusive right for sales of computer chips for tablet production within the Netherlands, while distributor Y distributes computer chips for smartphones.” This product-focused exclusivity prevents mutual competition without creating market division.

Additionally, you discuss whether the supplier may still sell directly within the exclusive territory. Some agreements prohibit this, others permit direct sales to government authorities while the distributor serves businesses and consumers. Without explicit agreement, the supplier may compete with the distributor according to Dutch law, which places the distributor in a weaker position.

Also include whether online sales are permitted via platforms such as bol.com or Amazon. These digital channels break through traditional territorial boundaries, making exclusivity without online agreements practically meaningless. This also protects distributors who invest in local marketing against online competition from fellow distributors from other regions.

What Pricing Agreements May You Establish Contractually in Dutch Law?

Purchase prices, discounts, and price lists for your distributor you include concretely in the distribution agreement. You agree, for example, that products are purchased for €45 per unit with 15% discount on orders exceeding 500 pieces. These agreements provide clarity about margins and prevent disputes over invoicing. Moreover, you can determine that the supplier may adjust prices intermediately with a pre-agreed notification period of, for example, 30 days.

However, mandatory resale prices for distributors are not legally permitted according to competition law. As a supplier, you therefore may not impose fixed end prices to which the distributor must adhere. Your distributor independently determines which sales price they charge, even when this falls lower than your recommended price. This means distributors may conduct clearance sales or run temporary discount promotions without your permission.

Recommended prices, on the other hand, are permitted. You communicate, for example, a suggested retail price of €99, but the distributor decides freely whether they charge €89 or €109. This freedom protects competition and prevents suppliers from artificially enforcing high prices that disadvantage consumers. Dutch courts enforce this rule strictly and declare contract clauses with mandatory prices void.

Exceptions During Marketing Campaigns

Temporary price agreements are possible during specific marketing campaigns of limited duration. When you as supplier conduct a national advertising campaign in which you advertise with a price of €79, you may agree for that campaign period that distributors maintain this price. This prevents advertising statements from being immediately undermined by deviating prices at points of sale.

However, this exception applies exclusively to short-term campaigns of several weeks. The campaign must also have a clear start and end date. After completion, the distributor again determines their sales prices completely independently. In practice, you reserve approximately €12,000 to €25,000 for larger national campaigns where such temporary price agreements become relevant.

How Do You Prevent Problems When Terminating the Agreement Under Dutch Law?

Termination conditions under Dutch law egularly cause disputes between suppliers and distributors, even when a notice period appears in the contract. The Supreme Court (Hoge Raad) determined in 1999 that in the absence of contractual termination provisions, reasonableness and fairness require that termination is only possible with sufficiently weighty grounds. This standard applies even to commercial contracts between professional parties.

A French wine house, for example, terminated after one hundred years of collaboration the distribution agreement with a Dutch importer. The Court ruled that without justified reason this termination was not legally valid, despite the absence of an explicit termination provision. Such rulings demonstrate that long-standing trade relationships enjoy legal protection that extends beyond the literal contract text.

Therefore, you include a detailed termination provision in which you establish:

• When termination is possible (after a certain period, upon reaching targets, or at any time)
• Whether a weighty ground remains necessary for this
• Which notice period parties observe (for example, three, six, or twelve months)
• Whether the terminating party owes compensation
• What qualifies as weighty ground (for example, serious breach, fraud, or bankruptcy)

Regulating Consequences After Termination

Also discuss what happens with remaining inventory after termination. May the distributor sell this at reduced prices or must the supplier repurchase it? In some cases, parties agree that the supplier provides technical support for three months after termination for already sold products.

Additionally, you determine whether a transition period applies during which the distributor may complete existing customer relationships. This period prevents ongoing projects from stopping abruptly, which damages the reputation of both parties. For complex B2B products, you often maintain a transition period of three to six months.

What Do You Expect From Each Other During Collaboration in the Netherlands?

Concrete agreements about tasks and obligations prevent disappointments and disputes. As supplier, you want your distributor to actively develop the market, maintain sufficient inventory, and offer customers professional service. Distributors in turn expect support, training, and timely communication about inventory problems or product changes. You explicitly record these mutual expectations in the agreement.

Consider the following tasks for distributors:

• Maintaining a minimum inventory of, for example, 200 units or valued at €15,000
• Attending or organizing at least four trade fairs per year
• Conducting monthly ten qualified sales conversations with potential customers
• Delivering quarterly an overview of executed marketing activities and achieved turnover
• Providing national service and warranty to customers according to the supplier’s conditions
• Protecting confidential information about prices and product specifications

Obligations for Suppliers

Distributors invest time and money in market development. Therefore, they expect suppliers to support them adequately. This includes:

• Timely delivering product samples, brochures, and advertising materials
• Organizing technical training for the distributor’s sales team
• Communicating at minimum two weeks in advance about inventory problems or production delays
• Providing assistance during trade fair participation, for example by making technical specialists available
• Informing about product improvements or new models before these enter the market

With sustainable production, you include specific agreements about environmental standards and production certification. This prevents your distributor from accidentally engaging in greenwashing when the supplier silently switches to less sustainable production processes. These agreements become increasingly relevant as customers and regulators become more critical about sustainability claims.

In approximately 40% of distribution relationships, problems arise because parties have implicit expectations that are not contractually established. A distributor expects, for example, a marketing budget of €5,000 per quarter, while the supplier makes at most €1,500 available. You avoid such misunderstandings by including concrete agreements with amounts and deadlines.

Do you want certainty about the legal validity of your distribution contract under Dutch law? Our specialized lawyers in Amsterdam analyze your specific situation and advise on contractual protection that aligns with your commercial objectives and competition law obligations.

Which Law and Court Determines Disputes Under Netherlands Law?

Applicable law and competent jurisdiction you determine explicitly in your distribution agreement. This choice prevents you from being surprised during disputes by unfamiliar foreign legal procedures and cost structures. For Dutch suppliers, it is advisable to declare Dutch law applicable with the Dutch court as the competent authority for dispute resolution.

Within the European Union, according to EU Regulation 593/2008 Article 4, in the absence of a choice of law, the law of the distributor’s country automatically applies. This means that a Dutch supplier who collaborates with a German distributor without choice of law falls under German law, with all unknown legal risks thereof. This automatic coupling makes an explicit choice of law in your contract essential.

For countries outside the European Union, you investigate in advance which rules apply when you do not include a choice of law. Some countries have protective legislation for distributors comparable to Dutch franchise legislation, where upon termination goodwill compensation is automatically owed. These mandatory provisions apply regardless of what you include in your contract, making legal advice about international distribution necessary.

Considering Arbitration as Alternative

Besides courts, you consider arbitration as dispute resolution, for example through the Permanent Court of Arbitration or the International Chamber of Commerce. Arbitration offers faster procedures than regular courts and rulings remain confidential. Moreover, countries worldwide recognize arbitration awards more easily than foreign court rulings.

However, arbitration offers no possibility for appeal and arbitrators charge higher hourly rates than judges. For contracts with a value exceeding €100,000, these costs often justify themselves because disputes are resolved faster. For smaller distribution relationships, the Dutch court usually remains the most cost-effective choice.

You also determine in which language proceedings take place. For international distributors, this prevents confusion about translation costs and interpretation differences during legal procedures. Dutch suppliers usually choose Dutch or English as procedural language, depending on the distributor’s language proficiency.

The Netherlands has no specific statutory provisions for distribution agreements, whereby freedom of contract largely applies. This means you are responsible for recording all relevant conditions yourself. Without explicit agreements, you fall back on general provisions from the Dutch Civil Code, which do not always align well with your commercial interests. Therefore, you invest in a tailored contract that specifically protects your distribution relationship.

Standard contracts from organizations such as the International Chamber of Commerce or the Association of Dutch Commercial Agents and Importers offer a solid foundation for beginning distribution relationships. These model contracts cover the most important legal aspects and cost considerably less than completely customized solutions. For larger or more complex distribution relationships, you subsequently adapt these models with legal guidance.

Contact our law firm in Amsterdam for personal legal advice about your distribution agreement. We ensure that your contract is legally sound and optimally aligns with your business objectives, competition law obligations, and international ambitions.