To end an agreement is not always easy

26 april 2017

What are the Dutch legal requirements for ending a collaboration? After a period of collaboration you want to end the collaboration you have with a company in The Netherlands. However there is no written agreement. Is it possible to end the collaboration without any prior notice? And is this different when a written agreement is in place?

In most countries any agreement is a contract, even when there is no written agreement. This is the same in the Netherlands. So even if there is no proof in writing, an agreement may exist. An agreement can even arise by the fact that you have been doing business with a company in The Netherlands for a while. For example, if during a longer period of time you purchase products from a Dutch company and the price and the conditions of payment are similar each time, an agreement may have originated.

If this is the situation, you may not have agreed about ending this (verbal) agreement. In this situation the other party can force you to continue collaboration for a reasonable notice period. It’s even possible for him to force you to pay a compensation for the fact that you end the agreement.

A main rule in Dutch law states that it should always be possible to end an agreement. However, Dutch law also states that there must be a reasonable notice period and/or compensation to end an agreement. The main problem is that there are no clear directives on how to determine this reasonable notice period and/or compensation. This means that if there is no written agreement it may be unknown what the other party considers as a reasonable notice period and/or compensation. This brings a serious risk of a lawsuit when you and your contract partner disagree about over this reasonable notice period and/or compensation.

Does this mean that you are save as long as you have a written agreement, clearly stating what the written notice and/or compensation will be when the agreement is to be ended? Unfortunately a Dutch judge is always authorized to grant a compensation for ending a contract, even if you comply with the agreed notice period. Dutch judges consider all circumstances involving the ending of the agreement. And in some cases it can be unreasonable to end the contract, even when you respect the agreed notice period. Fortunately Dutch judges can not easily decide that, besides the agreed notice period, there also must be a compensation. It’s quite difficult to get such compensation in these cases. It therefore is recommendable to have a written agreement clearly outlining the obligations of all parties.

The legal advisors of Alfa Accountants en Adviseurs can help you make the right agreement and advice you in this matter.