What is the goodwill indemnity for commercial agents in the Netherlands?

Dutch term: Goodwillvergoeding handelsagent | Legal basis: Article 7:442 BW

The goodwill indemnity (goodwillvergoeding) under article 7:442 of the Dutch Civil Code compensates a commercial agent on termination for the new customers brought to the principal or for a substantial increase in business with existing customers, where the principal continues to benefit after termination. The indemnity is capped at one year's average remuneration over the last five years.

The indemnity is mandatory under EU Directive 86/653/EEC and cannot be contracted away. Dutch courts apply a three-step calculation: estimate the forward-looking commission the agent would have earned on the customers it brought, apply a fairness adjustment for the circumstances of termination, and apply the one-year cap. The numbers can be substantial for long-running agencies.

Why it matters for international businesses

For foreign principals, the goodwill indemnity applies even where the agency agreement is governed by non-EU law, per the CJEU Ingmar ruling (Case C-381/98). Termination of an agency without factoring in this exposure is a common and expensive mistake.