The ruling dated May 24, 2024, from the Court of Overijssel (ECLI:NL:RBOVE:2024:2771) concerns the determination of whether the arrangement between Bronco/IC and Intergas constitutes an agency or distribution agreement. The classification has implications for the court’s jurisdiction. This article delves into the critical points and the court’s findings.
Facts and circumstances
Back in 2005, Bronco/IC and Intergas concluded a distribution agreement, later granting Bronco/IC exclusive distribution rights in Spain by 2009. However, in 2012, Bronco/IC altered their approach, leading Saltoki to start ordering directly from Intergas. Despite this shift, Bronco/IC maintained customer relationships, set sales terms and continued to receive the profit margins
Does this change cause the agreement to qualify as agency instead of distribution?
Understanding Agency Agreements
A commercial agency agreement is an agreement in which one of the parties (‘the principal’) instructs the other party (‘the agent’), who has engaged himself to this instruction on payment of a commission (remuneration), to provide intermediary services in arranging contracts to be concluded by the principal with third persons and, where appropriate, to conclude such contracts in the name and for account of the principal, without being his subordinate; the commercial agency agreement may be effective between the principal and the agent for a fixed term or for an indefinite term (Article 7:428 BW).
Difference with distribution
While both agency and distribution agreements involve intermediaries, the key difference lies in the relationship with the supplier. An agent acts in the name and on behalf of the supplier, while a distributor acts independently and assumes financial risks and profits.
Court’s decision
Despite the operational changes suggesting an agency relationship, the court deemed Bronco/IC to continue functioning as a distributor. The original distribution agreement’s essence remained, and Bronco/IC’s role was confirmed by the overall context. Bronco/IC determined the sales strategy for Saltoki themselves and continued to trade with Saltoki in their own name, rather than on behalf of Intergas. The financial risks also lay with Bronco/IC and not solely or entirely with Intergas, which is a characteristic of a distributor.
The court concluded that the agreement does not qualify as an agency agreement.
Referral to commercial division
Consequently, the case is forwarded to the commercial chamber of the court for further proceedings, where legal representation is mandatory.
Takeaways
This case emphasizes the importance of clearly defining the nature of business relationships in contractual agreements. Understanding the nuances between distribution and agency agreements is essential for safeguarding business interests.
For tailored legal advice or queries concerning specific situations, feel free to reach out to Valegis Advocaten (a.schwegler@valegis.com).
