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A commercial agent in the Netherlands (handelsagent) whose agency agreement ends can claim a goodwill indemnity or goodwill compensation (klantenvergoeding) of up to one year’s remuneration, on top of any damages for irregular termination (Article 7:442 Dutch Civil Code). The indemnity is due for customers the agent brought in or significantly expanded, if they still bring the principal substantial benefits and payment is fair.
This page is for foreign principals with a Dutch agent, and for foreign agents working for a Dutch principal. It covers who counts as a commercial agent, which law applies, how notice works, what damages and goodwill indemnity cost, and which deadlines you must not miss. As a Dutch lawyer at MAAK Advocaten in Amsterdam, I advise both principals and agents when an agency relationship ends.
Who is a commercial agent under Dutch law?
A commercial agent is an independent intermediary who, for remuneration and for a fixed or indefinite period, negotiates contracts for a principal and may also conclude them in the principal’s name and for its account, without being subordinate to the principal (Article 7:428(1) DCC).
Three points matter for a foreign business. First, the Dutch rules are wider than the EU Agency Directive: they cover agents for services as well as goods, and the Dutch Supreme Court applies Article 7:442 in line with the Directive in both cases (Hoge Raad 2 November 2012, T-Mobile, ECLI:NL:HR:2012:BW9865, para. 4.1). Second, the agency rules do not apply to agency agreements covered by the Dutch Financial Supervision Act (Article 7:428(2) DCC). Third, a distributor is not an agent: a distributor buys and resells in its own name and for its own account, and Article 7:442 does not give it a goodwill indemnity. If your partner is a distributor, read our page on the distribution agreement in the Netherlands, and on the difference between distribution and agency.
What the agreement should contain, from commission to territory, is explained on our page on the commercial agency agreement under Dutch law. This page is about the end of the relationship.
Does Dutch agency law apply if the principal is abroad?
If the agent sells goods and carries on its activity in an EU Member State, the indemnity rules of the Agency Directive apply even if the contract is governed by the law of a non-EU country. The Court of Justice held this in a case between a UK agent and a Californian principal (Court of Justice 9 November 2000, Ingmar, C-381/98, para. 25).
The reverse is not true. If the agent works outside the EU, the fact that the principal is established in a Member State is not a sufficiently close link with the EU for the Directive to apply (Court of Justice 16 February 2017, Agro Foreign Trade & Agency, C-507/15, para. 33). That only means EU law does not require the indemnity; whether such an agent can claim one depends on the law governing the contract. For a US or UK principal with an agent in the Netherlands, the practical conclusion is simple: a choice of New York or English law does not remove the indemnity of an agent selling goods. Plan for it rather than draft it away.
Once a Dutch court has jurisdiction, cases about an agency agreement go to the subdistrict court (kantonrechter), whatever the amount (Article 93(c) Dutch Code of Civil Procedure). Within the Netherlands, besides the court of the defendant’s domicile, the court of the place where the agent usually works, or last usually worked, also has jurisdiction (Article 100 Code of Civil Procedure).
How can a Dutch agency agreement be terminated?
An agreement for an indefinite period, or a fixed-term agreement with a right of interim termination, ends by notice. Without agreed terms, the notice period is four months, plus one month after three years and two months after six years (Article 7:437(1) DCC).
| Duration of the agreement | Statutory notice period (nothing agreed) | Shortest period the parties may agree |
|---|---|---|
| First year | 4 months | 1 month |
| Second year | 4 months | 2 months |
| Third year | 4 months | 3 months |
| After three years | 5 months | 3 months |
| After six years | 6 months | 3 months |
If the parties agree longer periods, the period for the principal may not be shorter than the period for the agent (Article 7:437(2) DCC). The parties cannot deviate from the minimum periods (Article 7:445(1) DCC). Notice is given for the end of a calendar month (Article 7:437(3) DCC). A fixed-term agreement that both parties continue after its term binds them for an indefinite period on the same terms (Article 7:436 DCC).
Immediate termination is possible for an urgent cause (dringende reden) that is communicated to the other party without delay: circumstances such that the terminating party cannot reasonably be expected to continue the agreement, even temporarily (Article 7:439(1) and (2) DCC). A clause that lets one party decide whether an urgent cause exists is void (Article 7:439(4) DCC). Either party can also ask the subdistrict court to dissolve the agreement for an urgent cause or for a change in circumstances (Article 7:440(1) DCC). The agreement ends on the death of the agent (Article 7:438(1) DCC).
What damages are due after irregular termination?
A party that ends the agreement without respecting its duration or the notice period, without the other party’s consent and without an urgent cause, is liable for damages (Article 7:439(1) DCC). So is a party whose own fault caused the urgent cause (Article 7:439(3) DCC).
The liable party owes a sum equal to the remuneration for the period the agreement should have continued on regular termination, based on the commission earned in the preceding period and all other relevant factors. The court may reduce that sum if it is too high in the circumstances. Instead, the injured party may claim its full loss, but must then prove it (Article 7:441 DCC). The injured party is usually the agent, but it can be the principal, for example when the agent stops without notice. These damages are separate from the goodwill indemnity.
When is the goodwill indemnity due?
The agent is entitled to a goodwill indemnity at the end of the agreement to the extent that it brought the principal new customers or significantly expanded business with existing customers, those contracts still bring the principal substantial benefits, and payment is fair, in particular in view of the commission the agent loses (Article 7:442(1) DCC).
Notice given properly does not remove the indemnity. It is not due in three situations only (Article 7:442(4) DCC):
- the principal ended the agreement for an urgent cause for which the agent is to blame (Article 7:439(3) DCC);
- the agent ended it, unless that is justified by circumstances attributable to the principal, or by the agent’s age, disability or illness;
- the agent, in agreement with the principal, transferred its rights and obligations under the agreement to a third party.
Before the agreement ends, the parties cannot deviate from Article 7:442 to the agent’s detriment (Article 7:445(2) DCC). A clause that excludes or caps the indemnity in advance therefore does not protect the principal. After the agreement has ended, the parties are free to settle.
How is the goodwill indemnity calculated?
The court works in three phases: it quantifies the principal’s benefit from the customers concerned, checks whether that amount is fair in view of all circumstances and in particular the agent’s lost commission, and then applies the statutory maximum. The Supreme Court adopted this method from the Court of Justice (Court of Justice 26 March 2009, Semen, C-348/07; Hoge Raad, T-Mobile, para. 4.3).
- Benefit to the principal. The starting point is the gross commission the agent earned in the last twelve months on the new and intensified customers. That amount is corrected for the expected duration of the benefit, customer attrition and the fact that the agent receives the money at once (T-Mobile, para. 6.2).
- Fairness. The court weighs all circumstances, in particular the commission the agent loses on these customers (Article 7:442(1)(b) DCC).
- Maximum. The indemnity is not higher than one year’s remuneration, calculated on the average of the last five years or, if the agreement lasted less long, on the average of its whole duration (Article 7:442(2) DCC). “Remuneration” here means commission in a broad sense (T-Mobile, para. 5.1.2).
One condition comes before any calculation. The agent must make it plausible that the principal can still expect new transactions, to a relevant extent, with the customers the agent brought in or expanded (Hoge Raad 19 May 2017, Prijsvrij/Corendon, ECLI:NL:HR:2017:935, para. 3.3.4). In that case, the agent did not succeed on this point and its appeal was dismissed.
In practice, the discussion is rarely about the statutory maximum. It is about which customers are “new” or “significantly expanded”, and whether they will keep ordering. I therefore start with the customer list and the commission statements of the last five years, before anyone talks about an amount.
Which deadlines apply after the agreement ends?
| Claim | Deadline | Consequence of missing it |
|---|---|---|
| Goodwill indemnity | Agent notifies the principal that it claims the indemnity, at the latest one year after the end of the agreement (Article 7:442(3) DCC) | The right lapses |
| Damages for irregular termination or after dissolution (Articles 7:439 and 7:440 DCC) | One year after the event that gave rise to the claim (Article 7:444 DCC) | The claim is time-barred |
For the goodwill indemnity, a timely notification is enough; the agent does not have to start proceedings within that year. The agent also keeps its right to commission on contracts concluded after the end that are mainly due to its work and concluded within a reasonable period, and on orders received before the end (Article 7:431(2) DCC). The principal must provide written commission statements with the data behind them, and the agent may inspect the supporting documents (Article 7:433 DCC).
Can the principal still rely on a non-compete clause?
Only within strict limits. A post-termination restriction is valid only if it is in writing, relates to the type of goods or services the agent represented and to the territory, or the customer group and territory, entrusted to it, and lasts no longer than two years (Article 7:443 DCC). The principal cannot rely on it if it ended the agreement irregularly, if the agent left for an urgent cause the principal is to blame for, or after a court decision based on the principal’s fault. More on non-compete clauses in Dutch commercial agency contracts.
You want to end a Dutch agency: what should you do first?
Most principals I speak to have already decided to end the agency; the question is how to do it without a dispute that drags on. My advice follows a fixed order:
- Check the contract and the clock. Is it for an indefinite period, what notice was agreed, and does it respect the statutory minimum? Then pick the end of a calendar month that gives the full period.
- Collect the figures. Commission statements of the last five years and a customer list showing who the agent brought in or expanded. This tells you the maximum and the realistic range before you send anything.
- Give notice, preferably in writing so you can prove it, for the end of a calendar month unless agreed otherwise (Article 7:437(3) DCC).
- Settle after the end date, not before. A settlement on the indemnity is valid once the agreement has ended (Article 7:445(2) DCC).
For an agent who has received notice, the order is the same, with one addition: send the principal a written notification that you claim the goodwill indemnity well within the year, and ask for the commission statements you are entitled to.
Practical example
Suppose a US maker of industrial pumps has worked for seven years with a Dutch agent, under a contract governed by Delaware law that says nothing about notice. The principal wants to sell directly and gives three months’ notice by email. The Delaware choice of law does not remove the indemnity, because the agent sells goods and works in the Netherlands (Ingmar). Whether the Dutch notice period of six months after six years also applies despite that choice is a separate question. The better route is a notice letter with a period that also meets the Dutch rules, a calculation based on the agent’s customer list, and a settlement after the end date. The exit then becomes a cost the principal can plan, instead of a claim.
When should you involve a Dutch lawyer?
Ideally before notice is given, because the notice letter fixes the end date, and the deadlines run from there. You should certainly involve a Dutch lawyer when the other party invokes an urgent cause, when an agent’s claim letter arrives, when the year for notifying the indemnity claim is running out, or when the contract chooses a foreign law and you need to know what still applies.
How does MAAK Advocaten work in agency cases?
In the first days I read the contract, the commission statements and the correspondence, and I tell you which deadlines are running and what range of indemnity is realistic. Then we agree on the goal: a quick exit, keeping the customers, or the best settlement. In my experience, many of these cases end in a negotiated settlement. If not, we act for principals and agents before the subdistrict court and in appeal, and in arbitration if the contract provides for it. Foreign clients can work with us in English.
Are you ending an agency relationship in the Netherlands, or has your Dutch principal given you notice? Contact our Dutch commercial agency lawyer and send me the contract and the last commission statements.
Frequently asked questions about commercial agents in the Netherlands
What is a goodwill indemnity for a commercial agent in the Netherlands?
It is a payment the principal owes the agent at the end of the agency agreement for customers the agent brought in or significantly expanded, if those customers still bring the principal substantial benefits and payment is fair. It is capped at one year’s remuneration and comes on top of any damages (Article 7:442 DCC).
Can a foreign principal exclude the goodwill indemnity by choosing another law?
Not if the agent sells goods and works in an EU Member State. The Court of Justice held that the indemnity rules of the Agency Directive then apply whatever law the parties chose (C-381/98, Ingmar). Under Dutch law, a clause excluding the indemnity before the agreement ends has no effect against the agent (Article 7:445(2) DCC).
What notice period applies to a Dutch agency agreement?
The agreed period, but not less than one month in the first year, two months in the second and three months after that. Without an agreement, the period is four months, five after three years and six after six years, ending at the end of a calendar month (Article 7:437 DCC).
How long does an agent have to claim the goodwill indemnity?
The agent must notify the principal, at the latest one year after the agreement ended, that it claims the indemnity; otherwise the right lapses (Article 7:442(3) DCC). Claims for damages for irregular termination become time-barred one year after the event that gave rise to them (Article 7:444 DCC).
When should I contact a Dutch agency lawyer?
Before you give or answer a notice of termination, because that letter fixes the end date from which the deadlines run. MAAK Advocaten in Amsterdam advises foreign principals and agents on notice, damages and the goodwill indemnity, and acts in negotiations and before the Dutch courts in first instance and appeal.
Primary sources
- Dutch Civil Code (Burgerlijk Wetboek), Book 7: Articles 7:428, 7:431, 7:433, 7:436, 7:437, 7:438, 7:439, 7:440, 7:441, 7:442, 7:443, 7:444 and 7:445
- Dutch Code of Civil Procedure: Articles 93 and 100
- Hoge Raad 2 November 2012, ECLI:NL:HR:2012:BW9865 (T-Mobile)
- Hoge Raad 19 May 2017, ECLI:NL:HR:2017:935 (Prijsvrij/Corendon)
- Council Directive 86/653/EEC of 18 December 1986 on self-employed commercial agents (CELEX 31986L0653)
- Court of Justice: C-381/98 Ingmar (9 November 2000), C-348/07 Semen (26 March 2009) and C-507/15 Agro Foreign Trade & Agency (16 February 2017)
Ending or reviewing a Dutch agency agreement? Ask our commercial agency lawyer in the Netherlands for a first assessment of notice, damages and goodwill indemnity.
