What is an agency agreement?
An agency agreement is the agreement whereby a principal instructs a commercial agent to act as an independent entrepreneur and in exchange for commission in mediating the conclusion of agreements between the principal and third parties — or to conclude those agreements on behalf of the principal. The commercial agent thereby becomes the principal's extended arm in a specific area or market segment, but does not enter into an employment relationship: he is an independent entrepreneur working for his own account and risk. The agency agreement is regulated in Articles 7:428 to 7:445 of the Dutch Civil Code and features an extensive mandatory legal framework to protect the generally weaker commercial agent. This makes the agency agreement legally fundamentally different from a distribution agreement or an ordinary contract for services — and this has far-reaching consequences for principals who do not realize this.
Our lawyers will draft an agency agreement for you that aligns with your commercial structure, your commission system, and your wishes regarding termination — and advise you on the mandatory legal obligations that you, as the principal, cannot contract away.
What is the difference between a sales agent, a distributor, and a franchisee?
This distinction is of great practical importance and is frequently confused in commercial practice. A commercial agent mediates in bringing about agreements on behalf of the principal and is paid for this by commission — he does not purchase anything himself and bears no inventory risk. The agreement he brings about is an agreement between the principal and the customer. A distributor purchases products from the principal in his own name and for his own account, and resells them to his customers. He bears the inventory and accounts receivable risk himself. A franchisee operates a business under the formula and brand of the franchisor in exchange for payment of a fee. The legal classification determines which statutory regime applies. A partnership that effectively functions as an agency but is contractually established as distribution or a mandate may still be classified as an agency by the court — with all the mandatory legal consequences that this entails for the principal. Our lawyers assess the legal classification of your partnership before you sign.
What mandatory legal protection applies to the commercial agent?
Agency law contains an extensive package of mandatory provisions in favor of the commercial agent, from which the principal cannot deviate contractually to the detriment of the agent. The most important are the following. The principal cannot impose an unreasonably heavy commission payment or chargeback right on the agent. Notice periods are statutoryly minimized and can only be extended contractually, not shortened. Commission rights after termination are mandatorily regulated: the agent retains the right to commission on transactions that occur after the termination as a result of his prior efforts. Customer compensation upon termination cannot be contractually excluded before the end of the agreement. Furthermore, the agent is entitled to inspect the principal's records insofar as necessary for the verification of his commission. If you, as the principal, attempt to contract away this protection, those clauses are void and the statutory provisions apply. Our lawyers will advise you on what scope there actually is within the mandatory framework.
What are the essential components of an agency agreement?
A sound agency agreement regulates at least the following components: The scope of activity and the product groups for which the agent is appointed, whether exclusively or not. The commission structure: the percentage, the basis (net or gross turnover), the payment term, and the method of settlement. The question of whether the agent also receives commission on transactions concluded by the principal itself within the agent's scope of activity — in the case of exclusivity, this is usually the case. The obligations of the agent: duty of care, reporting obligation, duty of loyalty, and the prohibition against competing with the principal without permission. The obligations of the principal: providing product information, price lists, and marketing material, and informing the agent in a timely manner of relevant developments. The duration and termination. The non-compete clause for after termination. And a dispute resolution mechanism with a choice of forum.
What notice periods apply to an agency agreement?
The law establishes minimum notice periods that cannot be shortened contractually. For an agency agreement that has lasted less than one year , a minimum notice period of one month applies. For a duration of one to two years, the minimum period is two months. For a duration of two years or longer, a minimum notice period of three months applies. If no contractual agreements have been made regarding the notice period, longer statutory periods of four, five, or six months apply, depending on the duration of the relationship, pursuant to Article 7:437 of the Dutch Civil Code. Termination before the expiration of the contractual or statutory notice period constitutes an irregular termination by the liable party, in which case the injured party may claim compensation equal to the commission for the period not observed. In the case of urgent reasons, termination is possible immediately, but the threshold for doing so is high. Our lawyers will advise you on the correct termination procedure for your specific situation.
When is the commercial agent entitled to commission after termination?
Commission rights following the termination of an agency agreement are one of the most underestimated obligations for principals. Pursuant to Article 7:431, paragraph 2 of the Dutch Civil Code, the agent is entitled to commission on transactions concluded as a result of his prior efforts, even after termination, provided that those transactions are concluded within a reasonable period after the termination. The agent is also entitled to commission on transactions in which he was involved during the agency period but which were only completed after termination. How long this post-commission right continues depends on the circumstances—in practice, a period of three to six months is often considered reasonable. Principals who immediately stop paying commission after termination run the risk of a claim for post-commission, including statutory interest and any extrajudicial costs. Our lawyers advise you on the extent of your post-commission obligations upon the termination of your agency relationship.
What is goodwill compensation and how is it calculated?
The goodwill compensation — legally referred to as the client compensation — is the compensation that the principal may owe to the commercial agent upon termination of the agency agreement pursuant to Article 7:442 of the Dutch Civil Code. The right to goodwill compensation is not automatic. The agent must demonstrate that he has introduced new clients or substantially expanded turnover with existing clients, and that the agreements with these clients continue to yield substantial benefits to the principal even after termination. The calculation proceeds in three phases. In phase one, the benefit that the principal derives from the clients introduced by the agent after termination is determined, calculated on the basis of the gross commission earned by the agent from new and intensified clients in the last twelve months. In phase two, an equity adjustment follows based on all circumstances, taking into account, among other things, whether the agent takes his client base with him to a new principal. In phase three, a statutory maximum of one year's commission applies, calculated over the average of the last five years. The goodwill compensation cannot be contractually excluded before the end of the agency agreement — such a clause is void. Our lawyers calculate the expected goodwill compensation for you and advise you on the strategy upon termination.
When does the right to goodwill compensation lapse?
There are four situations in which the commercial agent is not entitled to goodwill compensation. First, if the principal terminates the agency agreement on the grounds of an urgent cause attributable to the agent. Second, if the agent terminates the agreement himself, unless the termination is the reasonable consequence of circumstances attributable to the principal, or of the agent's illness or retirement. Third, if the agent transfers his rights and obligations to a third party with the principal's consent. And fourth, if the agent has not notified the principal of his claim in writing within one year after the termination of the agency agreement — this is a forfeiture period, not a limitation period, so interruption is of no help. For principals who wish to terminate the agency agreement without paying goodwill compensation, it is essential that the grounds for termination are correctly documented. Our lawyers will advise you on this well in advance of the termination.
What are the rules regarding a non-compete clause in an agency agreement?
A non-compete clause in an agency agreement—which restricts the agent's commercial activities after the termination of the relationship—is only valid if it has been agreed upon in writing, relates to the geographical area or client base for which the agent was active, and relates to the same type of goods or services for which the agent was active. The maximum duration is two years after the termination of the agency agreement pursuant to Article 7:443 of the Dutch Civil Code. A broader non-compete clause—longer than two years or geographically or sectorally broader than the agent's actual activities—is void to the extent exceeding that period. Furthermore, the court may moderate the clause if its application in the given circumstances is unacceptable according to standards of reasonableness and fairness. Our lawyers will draft a non-compete clause for you that meets all legal requirements and is defensible in any potential legal proceedings.
How can you, as principal, limit the goodwill compensation?
Although goodwill compensation cannot be contractually excluded, there are strategic measures the principal can take to limit its scope. First, at the start of the agency relationship, you can document the principal's existing client base so that, upon termination, it is clear which clients already existed and were not introduced by the agent. Second, you can agree that the agent receives a start-up fee for acquiring an existing client base—this can be factored into the equity adjustment. Third, you can structure the commission agreements in such a way that the annual average is as low as possible, given that goodwill compensation is capped at one year's commission. And fourth, in the event of termination based on compelling reasons, you can carefully construct the defense scenario. Our lawyers advise you on the possibilities to limit your goodwill compensation risk as much as possible right from the start of the agency relationship.
How does it work at MKBjuristen?
After a brief intake, our lawyers map out your commercial structure, your area of operation, your commission system, and your wishes regarding the agency relationship. Based on this, we draft an agency agreement tailored to your situation — featuring clear commission terms, a workable termination arrangement, a legally sound non-compete clause, and a documented existing client base that limits your goodwill compensation risk. Are you already working with a commercial agent without a written agreement or based on an outdated contract? In that case, we will assess your position and draft an updated agreement. Do you wish to terminate an agency relationship, or is your relationship being terminated? We will then advise you on notice periods, post-contract compensation, goodwill compensation, and any potential claims for damages — as both principal and agent.
