Agency and distribution: termination

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Different rules apply to the termination of agency and distribution agreements. What do you have to consider if you want to terminate an agreement? What are your rights if an agreement is terminated?

Agency and distribution agreements usually run for longer periods of time. But what happens if the parties do not want to continue an agreement? For example, if a manufacturer realizes that it would be less expensive to sell directly to customers? Or if a principal has been dissatisfied with the results achieved by an agent? And what if a distributor, contrary to all agreements, sells products of a competitor? Is it possible to terminate an agreement just like that? Or does a notice period apply? And does it make a difference whether it concerns an agency or distribution agreement?

Fixed-term agency and distribution agreements: terminability and notice period

To determine whether your agency or distribution agreement is terminable, you need to know first of all whether you have entered into a fixed-term agreement or into an open-ended agreement. Has the agreement been entered into for a fixed-term of, for example, two years? In that case the agency or distribution agreement cannot, in principle, be terminated prematurely. However, when entering into an agreement, the parties may arrange that the agreement can be terminated prematurely. In that case the minimum statutory notice periods still apply to agency agreements. The following applies on termination:

  • within one year: one month;
  • after one year or more, but within two years: two months; and
  • after two years or more: three months.

When it comes to distribution agreements, parties are free to determine the length of a notice period.

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