Distribution contract under Dutch law

A Dutch distribution contract under Dutch law is an agreement t between the trader (sales intermediary) and the supplier or manufacturer. The trader (wholesaler-retailer) is involved in the sales distribution by the supplier or manufacturer. The dealer is the distributor of the supplier or manufacturer. Our Dutch contract lawyer in the Netherlands has an extensive experience in drafting distribution contracts, dealing with disputes between parties regarding (the termination of) a distribution agreement and will be happy to help you in the Netherlands.

An agency and distribution contract under Dutch law play and important role in many business model and help organisations to maximise their opportunities and manage their risk. It is important to be aware of the difference between an agent and a distributor before entering into any arrangement. An agent concludes sales in the name of your company and is paid commission on these sales, whereas a distributor purchases goods from you and then sells these on in its own name to the end user.

Distribution disputes in the Netherlands

Our experienced lawyers are happy to advice you about distribution disputes in the Netherlands. A written distribution contract plays an important role in many business models between a manufacturer and distributor and helps the parties involved to maximize their opportunities and manage their risk. Not every collaboration turned out to be the best one. Our Dutch lawyers in the Netherlands regularly handle distribution disputes in the Netherlands relating to: the wrongful termination of the distribution contract, selling outside a permitted geographic area, the breach of confidentiality obligation, the misuse of IP rights, setting up a competing business or the misrepresentation by one party. Whatever the circumstances of the dispute, our Dutch law firm in the Netherlands can be of assistance. We have the experience and skills that you require. Feel free to contact one of our Dutch litigators in the Netherlands for more information.

Drawing up a distribution agreement

Drawing up a distribution agreement under Dutch law is what we do on a daily basis. The authorised dealer usually has an authorised dealer agreement with the manufacturer as a framework agreement. The authorised dealer usually receives discounts from the manufacturer when purchasing the goods. The authorised dealer is free to set his own sales prices; he earns his income from the profit margin. Distribution law in the Netherlands is however not regulated by statutory law but by case law which has developed principles according to which an analogous application of commercial agency law to authorised dealers can be considered under certain circumstances.

As a foreign supplier, you may be in business contact with Dutch distributors, which may result in you being subject to Dutch law in the event of a dispute. It is important to note that there are important differences between the English or foreign legal rules and Dutch legal rules on distribution contracts.

Our tip: Seek advice from one of our Dutch contract lawyers specializing in distribution agreements when concluding a distribution agreement with a Dutch contractual partner.

Goodwill compensation at the end of the distribution agreement

An important difference between Dutch law and foreign jurisdictions, however, is often that a distributor in the Netherlands does not receive any goodwill compensation at the end of the distribution agreement. Since the authorised dealer in the Netherlands, in contrast to the commercial agent, basically establishes his own customer base as an independent dealer, the most important prerequisite here, in addition to integration into the manufacturer’s sales organisation, is the obligation to hand over the customer data to the manufacturer at the latest upon termination of the contract. Our Dutch lawyers in the Netherlands will be happy to help you with this.

WHAT CLAUSES BELONG IN A Dutch DISTRIBUTION AGREEMENT?

One of the contractual partners can be any type of distributor. A distribution agreement is often a framework agreement under which the individual sales agreements hang. It is a continuing obligation for a longer-term cooperation, but these are not regulated separately by law in the Netherlands. Therefore, there are different variants of distribution agreements. Basically, such a distribution agreement regulates the cooperation between a manufacturing company and a distribution partner. These include, among others:

o Information on the contracting parties,

o Descriptions of the products or services to be distributed;

o Details of the specific tasks of both parties;

o Agreements on all financial aspects, such as commission settlement (discount amount on purchase prices, royalties), the payment deadlines and the modalities of settlement;

o Definition of operations requiring consent;

o Regulations in the event of disagreements and in cases of conflict;

o Regulations on issues of territorial protection (exclusivity vs. non-exclusivity, spatial limitation of the distribution area (countries), portfolio of products to be distributed (often in annexes);

o Agreements on how to proceed, for example, in acquisition, marketing measures and the formulation of contracts with customers;

o Agreements on training measures for sales staff;

o Information on the term and the termination modalities; and

o Restrictions of competition during the term of the contract: in particular post-contractual restrictions of competition.

the TERM OF A DISTRIBUTION AGREEMENT in the Netherlands

The distribution contract sets out the main agreements between the supplier and the distributor. The term of a distribution agreement in the Netherlands must be written down in the underlying contract. For example, the parties agree on the duration of the distribution relationship (whether limited or unlimited) or whether the distributor is only entitled to distribute within a certain contract territory (e.g. the Netherlands, Benelux or Europe). In some cases, an import contract is also part of the distribution contract. It is advisable to properly determine the duration of a distribution agreement. When a discussion about a distribution agreement arises, it is often about the notice period within which an agreement will be terminated. This often goes hand in hand with the question of whether additional damages are to be paid. You should seek advice from a Dutch lawyer in this regard.

the TERMINATION OF A DISTRIBUTION AGREEMENT

In the distribution contract you regulate the period and in which way the contract can be terminated. The period of notice can also be specified in the distribution contract. If a fixed-term distribution agreement has been concluded (e.g. with a term of two years), we can advise you on your legal options to part with your Dutch contract partner earlier.

If, on the other hand, you conclude a distribution agreement for an indefinite period of time, it can generally be terminated at any time. The period within which the distribution contract can be terminated depends on the circumstances of the individual case, such as the duration of the distribution contract. In some cases, however, there must be serious reasons for an effective termination of a distribution agreement. There is a lot of Dutch case law on this subject and the

lawyers at MAAK Advocaten will be happy to assist you in implementing a legally effective termination that is suitable for your case.

TERMINATION OF A DISTRIBUTION contract under Dutch law

It is advisable to seek advice from a specialized Dutch lawyer if you wish to terminate a distribution agreement with your Dutch contractual partner, especially if Dutch law applies. Your Dutch lawyer can assist you and inform you about all aspects that need to be considered when terminating a distribution agreement. In addition, your lawyer can ensure that you carry out the termination of a distribution contract under Dutch law in a legally effective manner and that all formalities are observed.

Of course, we are also happy to help you if you are confronted with the termination of a distribution agreement and your company could suffer serious damage as a result. All circumstances of the individual case play a role in the question of whether the termination is really legally effective. It may be, for example, that a longer notice period must be observed or that there must be a serious reason for termination. In the unlikely event that your case goes to civil proceedings (main proceedings or interim relief), the court will assess the legal validity of the termination on the basis of its reasonableness and fairness. This may be accompanied by a claim for compensation.

DUTCH LAWYER SPECIALIzED IN DISTRIBUTION LAW

Our team of Dutch lawyers in the Netherlands (Amsterdam) has a strong reputation in (international and domestic) contract law. Would you like to obtain advice on initiating a civil procedure in the Netherlands, or would you like to know more about the best clause in your distribution contract? Please contact our Dutch lawyer specialized in distribution law, Remko Roosjen, or one of our other Dutch lawyers in Amsterdam.

T:  +31 (0)20 – 210 31 38
E: mail@maakadvocaten.nl
Contact: Remko Roosjen | Dutch distribution lawyer