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Netherlands

NETHERLANDS

Implementing legislation

Law of 5.7.1989; re-enacted by law no. 374 of 1993 as Articles 428-445 of book 7, title 10, part 4 of the Dutch Civil Code (Burgerlijk Wetboek).

Proper notice

  • 1 month if less than or equal to 1 year
  • 2 months if more than 1 year and less than or equal to 2 years
  • 3 months if more than 2 years and less than or equal to 3 years
  • 4 months + 1 month if more than 3 years and less than or equal to 6 years
  • 4 months + 2 months if more than 6 years

If no notice period is agreed upon:

  • 4 months + 1 month if more than 3 years and less than or equal to 6 years. 
  • 4 months + 2 months if more than 6 years
  • 4 months if less than or equal to 3 years

Indemnity or compensation or both
Indemnity only

Calculation of indemnity/compensation
Capped at a maximum commission of one year, based on the average annual commission over last 5 years or, if less than 5 years, over the duration of the agency.

Pre-termination commission
Yes

Post-termination commission
Yes

Back commission
Yes, but only where there is express agreement

Other entitlements
Right to inspect the principal's books
Right to receive remuneration in the event that the agent is willing to perform the agency but the principal does not wish to use the agent's services

Restrictive Covenants

Implementing Legislation
The Civil Code (Burgerlijk Wetboek) – (September 2003)

1) Under Dutch law is it possible to have a restraint of trade clause operating during the agency agreement and, if so, is it subject to any qualifications?
A non-competition clause can operate during the agency agreement and following the termination, subject to various conditions.

If no restraint of trade clause is included in the agency agreement, the commercial agent may compete with the principal during and after termination of the agreement. However, under certain circumstances the competition against the principal could constitute an unlawful act within the meaning of article 6:162 of the Civil Code. This article reads as follows:

  1. “A person who commits an unlawful act against another which is attributable to him, must repair the damage suffered by the other in consequence thereof.
  2. Except where there are grounds for justification, the following are deemed unlawful: the violation of a right and an act or omission breaching a duty imposed by law or a rule of unwritten law pertaining to proper social conduct.
  3. A wrongdoer is responsible for the commission of an unlawful act if it is due to his fault or to a cause for which he is accountable by law or pursuant to generally accepted principles.”

To minimise the risk of legal conflicts, it is preferable to define what is allowed and what is seen as improper competition in the agency agreement. A restraint of trade clause which restricts the freedom of the commercial agent, is subject to the following restrictions (7:443 of the Civil Code):

  1. It must be agreed upon in writing, on penalty of nullity.
  2. It can only address the type of goods and services which the commercial agent represented and can only refer to the clientele or the area that was entrusted to him.
  3. It is restricted  to a maximum period of two years after the termination of the agency agreement.

The principal cannot derive rights from the restraint of trade clause when he terminates the agency agreement without the consent of the commercial agent, without giving notice and/or without urgent reasons that are stated immediately (art. 7:443 paragraph 3 section a Civil Code). In addition, when the commercial agent has terminated the agency agreement for urgent reasons that are immediately notified to the principal, and for which the principal is to blame (art. 7:443 paragraph 3 section b Civil Code), no rights can be derived from the restraint of trade clause. Finally, the principal cannot derive rights from the restraint of trade clause when the agency agreement is terminated by a court ruling based on circumstances for which the principal is to blame (art. 7:443 paragraph 3 section c Civil Code).

Even if the restraint of trade clause has expired accordingly and no problems regarding the termination occurred, the restraint of trade clause can be restricted by the Court (art. 7:443 paragraph 4 Civil Code). The Court has the authority to moderate the restraint of trade clause and to wholly or partially annul the clause at the request of the commercial agent if his interests are unreasonably damaged. To assess if the interests of the commercial agent are unreasonably damaged, the judge can give consideration to the possibility that the principal has to pay compensation for goodwill as referred to in article 7:442 Civil Code.

2) Under Dutch law is it possible to have a restraint of trade clause operating following the termination or expiry of the agency agreement and, if so, is it subject to any qualifications?

Article 20 of Council Directive 86/653/EEC was transposed into article 7:443 of the Civil Code, which reads as follows:

  1. “A stipulation limiting the commercial agent in his freedom to work after the end of the commercial agency contract, is only valid to the extent that:

    a)  it has been recorded in writing, and
    b)  relates to the kind of goods or services for which he was a representative and to the territory or the clientele and the territory entrusted to him.

  2. Such a stipulation is only valid for a maximum of two years after the end of the contract.

  3. The principal cannot derive rights from a stipulation, if the contract has ended:

    a) because he terminated it without the consent of the commercial agent, without observing the legal or contractual notice period and without an urgent reason notified forthwith to the commercial agent;
    b) because the commercial agent terminated the contract for an urgent reason, notified to the principal forthwith and for which the latter can be blamed; and
    c) by a judicial decision based on circumstances for which the principal can be blamed.

  4. On the application of the commercial agent, the court may annul such a stipulation in whole or in part on the basis that the commercial agent is unfairly prejudiced thereby, in proportion to the interest of the principal to be protected. “

agentlaw.co.uk wishes to thank Van Hermelen Beijneveld Van Houten of Rotterdam its contribution to this page

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