What is a distribution agreement?
Distribution agreements are not regulated by Dutch Law. In a distribution agreement, the distributor and the supplier make arrangements about the goods to be sold by the distributor in a specific territory. Agreements can also entail, for instance:
– The duration of the agreement;
– Prices of the goods to be sold;
– Competition clauses;
– Methods of termination
Terminating a distribution agreement
A distribution agreement is a so-called continuing performance agreement. I previously wrote a blog about the way continuing performance contracts can be terminated.
If no cancellation scheme is laid down in the distribution agreement, the agreement can in principle be canceled. However, the requirements of reasonableness and fairness may mean that cancellation is only possible if there is a sufficiently serious reason for the cancellation. The cancellation must take into account the interests of the other party. This is settled case law. It is therefore not easy to cancel a distribution agreement. Now that there is no statutory regulation with regard to a distribution agreement, the question whether a cancellation has had the intended legal effect in a particular case must be answered on the basis of reasonableness and fairness.
Reasonable notice period
If a distribution agreement can be terminated, a reasonable notice period must be observed, according to settled case-law. After all, a distributor must have time to adjust to the new situation. During the notice period, the distributor must be given the opportunity to place the usual orders. The damage of the distributor must be limited and the agreement must be observed during the notice period.
Lawyer specialized in distribution agreements
Our lawyer specialized in distribution agreements, mr. Lisa Jie Sam Foek, has lots of experience with drawing up distribution agreements and litigating them. If you would like advice about a distribution agreement or if you are faced with a dispute about this, please feel free to contact Lisa Jie Sam Foek.