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At MAAK Advocaten, we believe in providing comprehensive insights into the legal landscape to help individuals and businesses navigate complex matters effectively. In this article, we will delve into the concept of goodwill compensation under Dutch agency law. Whether you are an agent or a principal, understanding the requirements, calculation methods, and timelines for claiming goodwill compensation in the Netherlands for commercial agents is crucial. Our contract attorney in the Netherlands will explain the Dutch agency law in this new blog post.
Goodwill Compensation: An Essential Right
Under Dutch agency law, various methods exist for terminating agency agreements. Of these, the right to goodwill compensation holds significant importance for agents upon agreement termination. The primary objective of goodwill compensation is to provide agents with fair compensation for bringing in new business or substantially impacting the duration of existing agreements held by the principal.
Requirements for Goodwill Compensation in Holland
To be eligible for goodwill compensation under Dutch agency law, certain requirements must be met. According to Article 7:442 of the Dutch Civil Code, the principal is obligated to pay goodwill compensation to the agent. The eligibility criteria for this compensation depend on a reasonable cause considering all circumstances. The agent’s loss of future commission on contracts with third parties plays a vital role in determining reasonableness. Additionally, the extent to which the agent has generated new business that benefits the principal also factors into the compensation calculation. This benefit can arise from acquiring new clients or extending contracts through the agent’s direct actions.
Calculating Goodwill Compensation under Dutch law
The amount of goodwill compensation available is not rigid and depends on factors such as reasonableness and the agent’s contribution to new business. However, there is a maximum limit for goodwill compensation. Unless otherwise agreed upon in writing, the compensation cannot exceed the equivalent of one year’s compensation. This maximum is based on the average of the last five years or the actual period of work done.
Exceptions to Goodwill Compensation
Certain exceptions exist that may relieve the principal from the obligation to compensate the agent. These exceptions occur when:
- The principal terminates the Netherlands agency contract due to a breach by the agent.
- The agent terminates the contract (unless justified by conduct attributable to the principal or based on age, invalidity, or sickness preventing the agent from reasonably continuing their duties).
- The agent terminates the contract after transferring it to a third party with the principal’s authority.
Claiming Goodwill Compensation: Timeliness is Key
Commercial agents have the right to claim goodwill compensation, alongside any damages they may be entitled to. However, it is essential for agents to inform the principal of their intention to claim compensation within one year after the agency contract’s termination. Failing to notify the principal within this timeframe will result in the forfeiture of the right to goodwill compensation.
Seek Expert Assistance from a Dutch Agency Lawyer
The termination of agency agreements involves a complex process, making it crucial to assert your right to goodwill compensation in a proper and timely manner. At MAAK Advocaten, our experienced Dutch agency lawyer, Remko Roosjen, can provide valuable assistance throughout the termination of agency contracts for both agents and principals. If you have any queries or require expert legal guidance on goodwill compensation, please feel free to contact Remko Roosjen at: