There is more risk in a long-term agreement than one might think

As a retailer, you likely have a folder full of contracts. These involve contracts with energy suppliers, landlords, customers, and other partners. Some of these agreements will be short-term contracts, such as the agreement for the purchase of computers. Other agreements, however, are concluded for a longer period. These may involve long-term agreements for a fixed or indefinite period. With such long-term agreements, it is important to meticulously document everything; at least, that is what legal practice has shown.

Is it not a long-term agreement? Then stipulate that clearly

In the past, case law has indicated on several occasions that long-term agreements can also arise automatically. This was the case, among others, in a dispute between Vriends Tweewielercentrum and Batavus, in which the former purchased bicycles from Batavus over a long period based on individual orders. For the judge, this was sufficient to classify the agreement as a long-term contract, with all the associated consequences.

Do you only enter into agreements for individual orders? Then clearly stipulate that several consecutive orders should not automatically be considered a continuous agreement. This is not entirely watertight, but it does offer extra protection in the event of a legal dispute.

Always specify which type of long-term agreement it is

Is it a long-term agreement? If so, note that case law increasingly assumes that it concerns a long-term agreement for an indefinite period, unless otherwise agreed. Therefore, if applicable, clearly stipulate that it concerns a long-term agreement for a fixed term and specify the concrete duration.

Also take into account the issue of tacit renewal. After all, it is not always clear how such tacit renewal should be interpreted, which means there is a risk here as well that it will be regarded as an extension for an indefinite period. Clearly stipulate the term for which the long-term agreement is extended in the event of tacit renewal.

Consider the termination of the long-term agreement

You enter into a long-term agreement in good faith with the other party. Nevertheless, you must also take into account that things may go wrong during that long period, both on your part and on the part of the contracting party. Therefore, also consider the termination of the long-term agreement in advance.

First and foremost, be aware that a fixed-term contract cannot, in principle, terminate prematurely. Is this desired? If so, you will need to explicitly include this in the contract. However, ensure that such early termination remains within reasonable limits and provide for a reasonable notice period and any potential termination compensation.

Is it a long-term agreement for an indefinite period? In principle, you can then terminate the agreement without such a clause. However, here too, there must be a reasonable notice period and compensation. To avoid disputes, it is best to agree on that notice period and compensation in advance.

It is important that the notice period and compensation are reasonable. Otherwise, the termination may remain without effect. This is also the case with a contractual notice period and compensation, but in practice, it does entail a strengthening of the contractual position.

Take into account the opposing party's financial problems

In principle, the long-term agreement remains in effect, even if the counterparty is facing financial difficulties. This can be problematic, particularly if the goods that the supplier was supposed to deliver to you have been seized. For this reason, it is usually stipulated that bankruptcy, seizure, and suspension of payments constitute grounds for termination of the agreement.

Drafting long-term agreements is specialist work

In the article above, we outlined some of the problem areas when drafting long-term agreements. This primarily concerns the issues of termination and the classification of the long-term agreement. However, many other problems can still arise. Consider, for example, changing prices, strikes, or other unforeseeable circumstances.

At MKB Juristen, we have seen it all by now. Our years of experience ensure that we can proactively anticipate all kinds of situations that might arise during the course of the agreement.

From liability to a potential non-compete clause: with the agreements from MKB Juristen, you are well covered for a fixed or indefinite period!