Unlawful termination of dealer agreement

Court of Appeal in The Hague

The Court of Appeal in The Hague recently ruled in a case in which an importer and distributor of a car brand had terminated an agreement with one of its dealers. The cancellation in itself is not contested by the dealer. During the term of the agreement, the dealer starts a dealership for another car brand and informs the terminating importer and distributor of the first car brand about this in writing. Shortly afterwards, the first car brand terminated the dealer agreement on the grounds that the dealer had not complied with the contractual requirements for the use of separate sales space. The dealer denies that this is contrary to the concluded agreement.

The parties litigate in court, after which an appeal is lodged with the court. It ruled that the activity of the dealer to start a second car brand is not in conflict with the previously concluded agreement and that the dealer suffered damage for several reasons. This damage was caused, among other things, by the car brand cutting off the lines of communication, appointing a new dealer, and the fact that the car brand provided the new dealer with promotional material that enabled the latter to function as a new dealer.

With regard to the extent of the damage, the Court of Appeal also considers the necessary and in this case refers the case back to the docket.

The wrongful termination could have been prevented if the parties had carefully consulted about the scope of the new activities in relation to the existing dealership and perhaps had made good agreements in this regard. The dealer has now been disadvantaged by cancellation, which turned out to be unjustified and unlawful.

Mr Th.R. Ludwig – Franchise lawyer

Ludwig & Van Dam Franchise attorneys, franchise legal advice Would you like to respond? Mail to ludwig@ludwigvandam.nl