A Dutch commercial agency contract (agentuurovereenkomst) for an indefinite period is normally ended by notice: the agreed notice period or, if nothing was agreed, four to six months, depending on its duration (article 7:437 Dutch Civil Code). Ending it without notice, without an urgent cause and without consent makes the terminating party liable for damages (article 7:439). The agent may also claim goodwill compensation (article 7:442).
This page is for principals and agents, including businesses based outside the Netherlands, that are ending an agency relationship under Dutch law. It covers notice periods, termination with immediate effect, dissolution by the court, damages, goodwill compensation, non-compete clauses, time limits and bankruptcy. For the basics, see our overview of the Dutch commercial agency agreement. The general rules on ending other contracts are discussed in termination of a supply contract. As a contract lawyer in the Netherlands, I explain the main points below.
What is a commercial agency contract under Dutch law?
Under article 7:428(1) of the Dutch Civil Code (DCC), a commercial agency contract is a contract under which one party, the principal, instructs the other party, the commercial agent (handelsagent), to mediate in the conclusion of contracts for remuneration, for a fixed or an indefinite period. The agent may also conclude those contracts in the principal’s name and for its account. The agent is not subordinate to the principal. A distributor, by contrast, buys and resells in its own name; see the difference between distribution and agency under Dutch law.
No particular form is required. Each party can ask the other for a signed document setting out the current terms (article 7:428(3) DCC). The agency rules do not apply to agency contracts covered by the Dutch Financial Supervision Act (Wet op het financieel toezicht) (article 7:428(2) DCC). Many termination rules are mandatory: the parties cannot deviate from, among others, articles 7:437(2), 7:439, 7:440, 7:441, 7:443 and 7:444 DCC (article 7:445(1) DCC). As an agency agreement lawyer in the Netherlands, I advise principals and agents on these rules.
How can a Dutch agency contract end?
A Dutch agency contract can end in several ways, including:
- Expiry of a fixed term. A contract for a fixed period ends when that period expires. If both parties continue the contract after that, it binds them for an indefinite period on the same terms (article 7:436 DCC).
- Notice of termination. Either party can end a contract for an indefinite period, or a fixed-term contract with a right of interim termination, by observing the applicable notice period (article 7:437 DCC).
- Immediate termination for an urgent cause (dringende reden) that is communicated to the other party immediately (article 7:439 DCC).
- Dissolution by the subdistrict court (kantonrechter) at the request of either party (article 7:440 DCC).
- Mutual consent. A party that ends the contract with the other party’s consent is not liable for damages under article 7:439(1) DCC.
- Death of the agent (article 7:438(1) DCC).
For the general rules on ending other types of contracts, see termination of a contract under Dutch law.
What happens on death or bankruptcy?
The contract ends when the agent dies (article 7:438(1) DCC). If the principal dies, the contract does not end automatically. The principal’s heirs and the agent may then terminate it within nine months after the death, with a notice period of four months (article 7:438(2) DCC).
The statutory agency rules do not list bankruptcy as a ground on which the contract ends automatically. If the principal is declared bankrupt, the agent and the bankruptcy trustee (curator) may terminate the contract with the agreed or statutory notice period, and in any case with six weeks’ notice (article 40 of the Dutch Bankruptcy Act (Faillissementswet), which paragraph 3 declares applicable to agency contracts). Where the agent also concludes contracts in the principal’s name, the rules on mandate (lastgeving) may be relevant: a mandate ends on the bankruptcy of either party (articles 7:422(1) and 7:424 DCC). The agency rules do not say whether this applies to an agency contract. Whether the other party’s bankruptcy is an urgent cause for immediate termination depends on the circumstances (article 7:439(2) DCC).
What notice period applies to a Dutch agency contract?
Either party may terminate a contract for an indefinite period, or a fixed-term contract with a right of interim termination, with the agreed notice period. If nothing was agreed, the notice period is four months, plus one month after three years and two months after six years (article 7:437(1) DCC). Without an agreement, the notice period is therefore four, five or six months.
The parties may agree a shorter period, but not shorter than one month in the first year, two months in the second year and three months in later years. If they 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 these rules (article 7:445(1) DCC). Unless the parties agreed otherwise, notice must be given for the end of a calendar month (article 7:437(3) DCC; this rule is not mandatory).
The statute does not require ordinary notice to be in writing or to state reasons. Written notice is advisable as evidence. Notice that does not observe the notice period in principle still ends the contract, but the terminating party is then liable for damages, unless the other party consented or there was an urgent cause that was communicated immediately (article 7:439(1) DCC).
When can you terminate an agency contract with immediate effect?
Either party may end the contract without notice for an urgent cause. Urgent causes are circumstances of such a nature that the terminating party cannot reasonably be expected to continue the contract, even temporarily (article 7:439(2) DCC). The reason must be communicated to the other party immediately (article 7:439(1) DCC). Whether a cause is urgent is decided by the court on the facts of each case. A clause that leaves it to one party to decide whether an urgent cause exists is void (article 7:439(4) DCC).
If the urgent cause results from circumstances for which the other party is to blame, that other party is liable for damages (article 7:439(3) DCC). A party that relies on an urgent cause that does not exist has ended the contract without observing the notice period. It is then liable for damages under article 7:439(1) DCC, unless the other party consented.
Can the court dissolve an agency contract?
Yes. Either party may ask the subdistrict court to dissolve the contract on the ground of (article 7:440(1) DCC):
- circumstances that amount to an urgent cause within the meaning of article 7:439(2) DCC; or
- a change in circumstances of such a nature that fairness requires the contract to end immediately or after a short time.
If the court dissolves the contract for an urgent cause for which the defendant is to blame, the defendant is liable for damages (article 7:440(2) DCC). If it dissolves the contract because of changed circumstances, it may award compensation to either party and may order payment in instalments (article 7:440(3) DCC). The court determines the date on which the contract ends (article 7:440(5) DCC). The procedure starts with a request (verzoekschrift); the hearing begins no later than in the fourth week after the week in which the request was filed (article 7:440(4) DCC).
Which obligations survive termination?
Some claims arise or continue after the contract ends. The agent is entitled to commission on contracts concluded after the end of the agency contract if they are mainly due to the agent’s work during the contract and are concluded within a reasonable period after it ended. The same applies if the agent or the principal received the customer’s order before the end, under the conditions of article 7:431(1) DCC (article 7:431(2) DCC).
The principal must give the agent a written statement of the commission due, with the data on which the calculation is based. The agent may inspect the necessary supporting documents, but cannot demand that they are handed over (article 7:433(1) and (2) DCC). The agent, in turn, must account to the principal for the way it performed its work and for money it spent or received on the principal’s behalf (article 7:403(2) DCC).
The agent is only liable for the obligations of customers if it accepted that liability in writing in a del credere clause (delcrederebeding) (article 7:429(1) DCC). Apart from the confidentiality of the commission records (article 7:433(4) DCC), the statutory agency rules contain no general duty of confidentiality and no duty to return documents after the contract ends. Parties usually agree on these points in the contract. Restrictions on the agent’s activities after termination are discussed below.
How are agency disputes resolved?
Many disputes about the end of an agency relationship are settled by negotiation. The parties can also agree that disputes go to arbitration or to a particular court.
If either party decides to take legal action, they must do so in accordance with the applicable law and jurisdiction agreed upon in their contract. The court shall apply Dutch law for disputes arising under a Dutch agency contract. The court will also consider any other applicable treaties, laws and regulations when deciding on the case.
Before the Dutch courts, disputes about an agency contract are heard by the subdistrict court (kantonrechter), whatever the amount of the claim (article 93(c) of the Dutch Code of Civil Procedure). 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 of the Code of Civil Procedure).
What damages can be claimed after irregular termination?
A party that is liable under article 7:439 or 7:440(2) DCC must pay the other party a sum equal to the remuneration for the period during which the contract should have continued if it had been ended properly. For a contract for an indefinite period, that is usually the notice period that was not observed; for a fixed-term contract without a right of interim termination, the remaining term. The sum takes into account the commission earned in the preceding period and all other relevant factors (article 7:441(1) DCC).
The court may reduce this sum if it considers it too high in the circumstances; the statute does not allow an increase (article 7:441(2) DCC). Instead of the fixed sum, the injured party may claim full compensation of its loss, but must then prove the amount (article 7:441(3) DCC). The injured party is usually the agent, but it can also be the principal, for example when the agent stops without notice. These damages are separate from goodwill compensation.
When is goodwill compensation due on termination?
In addition to any right to damages, the agent is entitled to goodwill compensation (klantenvergoeding) when the contract ends, to the extent that (article 7:442(1) DCC):
- the agent brought the principal new customers or significantly increased the contracts with existing customers, and the contracts with these customers still bring the principal substantial benefits; and
- payment is fair, having regard to all circumstances, in particular the commission the agent loses on the contracts with these customers.
The compensation may not exceed one year’s remuneration, calculated on the average of the last five years or, if the contract lasted for a shorter period, on the average of its entire duration (article 7:442(2) DCC). The right lapses if the agent has not told the principal, within one year after the contract ended, that it claims compensation (article 7:442(3) DCC). Before the contract ends, the parties cannot deviate from article 7:442 to the agent’s detriment (article 7:445(2) DCC).
No goodwill compensation is due if the contract was ended (article 7:442(4) DCC):
- by the principal for an urgent cause for which the agent is to blame (article 7:439(3) DCC);
- by the agent, unless this is justified by circumstances attributable to the principal, or by the agent’s age, disability or illness, as a result of which the agent can no longer reasonably be required to continue its work; or
- by the agent who, in agreement with the principal, transfers its rights and obligations under the contract to a third party.
How the amount is calculated in practice is explained on our page on goodwill compensation for commercial agents in the Netherlands.
What time limits apply to claims after termination?
Claims based on articles 7:439 and 7:440 DCC, such as damages for irregular termination, become time-barred one year after the event that gave rise to the claim (article 7:444 DCC). The parties cannot deviate from this (article 7:445(1) DCC). The limitation period can be interrupted (stuiting), for example by a written demand (article 3:317 DCC). The court does not apply limitation of its own motion; the other party must invoke it (article 3:322(1) DCC).
For goodwill compensation, a separate deadline applies. The agent must notify the principal within one year after the contract ended that it claims compensation; otherwise the right lapses (article 7:442(3) DCC). This is a lapse period (vervaltermijn), so a late notification means the right is lost.
Which restrictions apply after termination?
A clause that restricts the agent’s freedom to work after the contract ends (non-compete clause, concurrentiebeding) is only valid to the extent that it is in writing and relates to the type of goods or services the agent represented and to the territory, or the customer group and territory, entrusted to the agent (article 7:443(1) DCC). It is valid for no more than two years after the contract ends (article 7:443(2) DCC). A clause that bars the agent from approaching the principal’s customers is such a restriction and must stay within the same limits.
The principal cannot rely on the clause if the contract ended (article 7:443(3) DCC):
- because the principal ended it without the agent’s consent, without observing the statutory or agreed notice period and without an urgent cause communicated immediately to the agent;
- because the agent ended it for an urgent cause, communicated immediately to the principal, for which the principal is to blame; or
- by a court decision based on circumstances for which the principal is to blame.
At the agent’s request, the court may set the clause aside in whole or in part if, in relation to the principal’s interest to be protected, the clause unfairly prejudices the agent (article 7:443(4) DCC). The parties cannot deviate from article 7:443 (article 7:445(1) DCC). Without a valid clause, the statutory agency rules do not prevent the agent from working for a competitor after the contract ends. More on this topic: non-compete clauses in Dutch commercial agency contracts.
Frequently asked questions about termination of a commercial agency contract
How do you terminate a commercial agency agreement in the Netherlands?
Give notice to the other party for the end of a calendar month, observing the agreed notice period or, if nothing was agreed, the statutory period of four, five or six months (article 7:437 DCC). The law does not require writing or reasons, but written notice is advisable as evidence. To end the contract with immediate effect without becoming liable for damages, you need an urgent cause that you communicate immediately, or the other party’s consent (article 7:439 DCC).
Can a principal terminate an agency agreement without cause?
Yes. A contract for an indefinite period can be terminated without a reason, provided the notice period is observed (article 7:437 DCC). If the principal does not observe it, and there is no urgent cause and no consent, it must pay damages (articles 7:439 and 7:441 DCC). Even after proper notice, the agent may be entitled to goodwill compensation (article 7:442 DCC).
What compensation is an agent entitled to on termination of an agency agreement?
There are two separate claims. After irregular termination, the agent can claim a fixed sum equal to the remuneration for the period the contract should have continued, which the court may reduce, or its full proven loss (article 7:441 DCC). In addition, the agent may claim goodwill compensation of up to one year’s remuneration for new or expanded customer business, if payment is fair (article 7:442 DCC).
When does an agency agreement end by operation of law?
A fixed-term contract ends when its term expires; if both parties continue, it becomes a contract for an indefinite period (article 7:436 DCC). The contract also ends on the death of the agent (article 7:438(1) DCC). The death of the principal gives the heirs and the agent a right to terminate (article 7:438(2) DCC). The agency rules do not list the principal’s bankruptcy as a ground for automatic termination; the agent and the trustee may terminate with the agreed or statutory notice period, and in any case with six weeks’ notice (article 40 Dutch Bankruptcy Act).
How long does an agent have to claim compensation after termination?
Claims for damages under articles 7:439 and 7:440 DCC become time-barred one year after the event that gave rise to them (article 7:444 DCC); a written demand can interrupt the limitation period (article 3:317 DCC). For goodwill compensation, the agent must notify the principal within one year after the contract ended that it claims compensation, or the right lapses (article 7:442(3) DCC).
Primary sources
- Dutch Civil Code (Burgerlijk Wetboek), Book 7: articles 7:403, 7:422, 7:424, 7:428, 7:429, 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 Civil Code, Book 3: articles 3:317 and 3:322
- Dutch Bankruptcy Act (Faillissementswet): article 40
- Dutch Code of Civil Procedure (Wetboek van Burgerlijke Rechtsvordering): articles 93, 99 and 100
Need a commercial agency contract lawyer in the Netherlands?
Ending a Dutch agency contract raises questions about the notice period, urgent causes, damages, goodwill compensation and the non-compete clause, and short deadlines apply. A contract for an indefinite period can be terminated without a reason, provided the notice period is observed. We advise principals and agents, including foreign businesses, before and after notice is given, and in proceedings before the subdistrict court.
I hope this article about the termination of a commercial agency contract under Dutch law has provided useful insight into Dutch agency law and how it applies to terminating an agency contract. When handling such cases, it is important to take all relevant factors into account before making a decision or taking any action. By doing so, one can ensure that their rights are protected while avoiding any legal issues arising from improper termination of an agency contract. Undersigned and my team of commercial agency contract lawyers in the Netherlands would be happy to be of assistance.
