Terminating a long-term contract
You’ve worked with the same manufacturer for six years. Or a licensee has been bringing your designs to market since your first collection. Under Dutch law, a working relationship like that with no fixed end date is a long-term contract (duurovereenkomst). If one of you wants to stop, the contract isn’t the only thing that decides what’s allowed. Over the past few years the Dutch Supreme Court has set out the rules for terminating a long-term contract in more and more detail, with the result that even a termination that follows the contract to the letter can still cost compensation.
At Liaise we act both for brands and manufacturers that want to end a working relationship and for businesses on the receiving end of a notice.
Received a notice of termination or about to send one? Call 020 675 88 21 or get in touch. You will have a reply within one working day.
Whether you can end a long-term contract with no end date
Under Dutch law, a long-term agreement for an indefinite period without a termination clause can in principle be terminated, but reasonableness and fairness may require a compelling reason, a reasonable notice period or an offer of compensation (Supreme Court, 28 October 2011, ECLI:NL:HR:2011:BQ9854, in Dutch). That standard comes from a case between the municipality of De Ronde Venen and grid operator Stedin (para. 3.5.1). The court decides which requirement applies based on the nature of the relationship and the circumstances of the case (Article 6:248(1) of the Dutch Civil Code, in Dutch).
It can also work the other way round. The parties may have intended that a contract for an indefinite period cannot be terminated at all. The Supreme Court expressly left that possibility open in 2018 in Goglio v SMQ, a case about a licence agreement (ECLI:NL:HR:2018:141, para. 3.6.5). Your only way out then is if holding on to that arrangement would be unacceptable by standards of reasonableness and fairness or if circumstances have changed in a way nobody foresaw (Articles 6:248(2) and 6:258 of the Dutch Civil Code).
The termination clause in your contract comes first
If the contract says how and with what notice you terminate, the agreement can in principle be terminated that way, as the Supreme Court reaffirmed in May 2025 in a case between forwarding company DPD and two firms that delivered parcels to people’s homes (ECLI:NL:HR:2025:763, para. 3.2). Both received notice with the agreed period of one month, although one of them had been driving for DPD since 2008.
The court of appeal found that month too short for a relationship that had become steadily more intensive over the years. It replaced it with three and two months. That wasn’t allowed (para. 3.4). A court may not swap an agreed notice period for a longer one just because the relationship changed after signing. It may only examine whether relying on that period would be unacceptable in the circumstances (Article 6:248(2) of the Dutch Civil Code). That’s a high bar.
Even when you terminate with the contractual notice period, reasonableness and fairness may require you to offer compensation. How much depends partly on whether you gave the other side more time than agreed (para. 3.4).
If you’re drafting a contract yourself, set a notice period that grows with the length of the relationship, as Dutch law does for commercial agents (Article 7:437 of the Dutch Civil Code). Then the balancing exercise the court is no longer allowed to do is already in your own contract.
A reasonable notice period when the contract says nothing
If there’s no termination clause, you’ll often have to observe a reasonable notice period. The Supreme Court gives no fixed table for it, even though schedules of three, six or twelve months do the rounds. The period depends on the nature and content of the relationship and the circumstances of the case.
In De Ronde Venen the Supreme Court gave as examples investments the other party still has to recoup and the time and cost of switching to the new situation (para. 3.6.2). It also matters whether the other party’s business depends on the arrangement continuing (para. 3.5.4). If your manufacturer bought a machine or set up a production line for your collection, that counts. If half of that manufacturer’s work is your orders, so does that.
If you’re the one receiving notice, document those investments and back them up with figures, because Stedin came off badly in De Ronde Venen when it had not put forward a single investment or switching cost that could justify a longer notice period or compensation (para. 3.6.2).
A compelling reason for termination is the exception
Sometimes a reasonable notice period isn’t enough and you may only terminate if you have a compelling reason. In De Ronde Venen the court of appeal required such a reason, but the Supreme Court overturned that ruling because the grid operator’s business did not depend on the arrangement continuing (para. 3.5.4). The more the other party has built on the relationship, the sooner a court will want to hear a reason.
Terminating without offering compensation usually doesn’t make the termination invalid
If you have to offer compensation when terminating and you don’t, the termination generally still stands. The Supreme Court decided this in November 2024 in a case about a Leen Bakker franchise agreement (ECLI:NL:HR:2024:1709, para. 3.3). You then still have to pay the compensation. When the amount is set, the court may take into account that you made no suitable offer when you terminated. Only if terminating without an offer is unacceptable in the circumstances is the termination invalid.
A longer notice period than agreed doesn’t rule out compensation either. The franchisee learned of the termination 23 months earlier than the contractual notice period of 13 months required. Even so, the franchisee was still entitled to compensation (para. 4.2). The extra time may reduce the amount, depending on the circumstances.
If you want to avoid proceedings about the amount, make a concrete offer when you terminate and support it with the circumstances the court looks at too.
Ending a fixed-term contract early
You end a relationship for a fixed period early in the way the contract provides. If it says nothing, first check whether the relationship is legally a contract for services (overeenkomst van opdracht). Think of a studio managing your house style or an agency running your campaigns.
Under a contract for services the client can terminate at any time, even if a fixed term was agreed (Article 7:408(1) of the Dutch Civil Code, in Dutch). Between businesses, the contract may exclude that free right of termination, because the law only prohibits deviating from it to the detriment of a private client (Article 7:413(2) of the Dutch Civil Code). As the service provider you can only terminate if the contract is for an indefinite period and doesn’t end when the work is done, except for serious reasons (Article 7:408(2) of the Dutch Civil Code).
If the world around the contract has changed drastically in a way nobody foresaw, the court can amend or dissolve the contract (Article 6:258 of the Dutch Civil Code). That route rarely succeeds. A confidentiality clause or a non-compete can also outlast the relationship itself.
Extra rules when you end things with an agent, distributor or franchisee
The Dutch Civil Code adds rules of its own for commercial agents and franchisees. The law sets a minimum notice period for an agent and may give the agent a goodwill indemnity when the relationship ends. A franchise agreement must itself set out how the franchisee’s goodwill is determined and compensated at the end (Article 7:920(1) of the Dutch Civil Code). With distribution, the end is often about remaining stock and customer data.
The pages on the commercial agency agreement, the distribution agreement and the franchise agreement explain what’s at stake in each. If it’s a licence on your design or trade mark, see also the licence agreement.
A lawyer for terminating a long-term contract
When you terminate, law and commerce run together. You want out of the relationship, but often with a supplier or licensee you’ll keep running into in the market. We first work out which notice period and which compensation are reasonable in your situation, before the notice goes out. If you’re the one receiving notice, we set out what you can ask for and what’s achievable. In the notice letter we refer to the contract and to the circumstances a court would look at later.
Want to end a working relationship or received a notice of termination? Get in touch or call 020 675 88 21.
