Termination Distribution Auping agreement denied

Koninklijke Auping B.V. (hereinafter: Auping) is a bed manufacturer who sells its products at Auping stores and at specialized bed- and furniture stores. Auping wants to adopt a new distribution strategy in which the amount of Auping stores should increase at the expense of stores which sell various brands. Lubbers Wonen B.V. (hereinafter: Lubbers) is such a furniture store which sells products of various brands. Lubbers has also been selling Auping products for over twenty years. Auping wants to terminate the contract with Lubbers. According to Dutch law, the question whether an agreement for an indefinite period can be terminated, is determined by the contents of the agreement and the applicable provisions in the law. In this case, the agreement itself did not provide regulations in how to terminate the agreement. This leads to the conclusion that in principle the agreement is considered to be terminable. However, the Dutch requirements of reasonableness and fairness may cause that termination is only possible if a sufficient weighty reason for termination exists.
According to the Dutch Court, Lubbers has adequately established that she is to a considerable extent financially dependent on the agreement with Auping. Therefore, Auping had to come up with a weighty reason to justify the termination. The decision to adopt a new distribution strategy is based on quantitative requirements. The imposition of such requirements is allowed, provided that these requirements rely on objective criteria and are not characterized by randomness. Auping’s intention to realize more Auping stores is comprehensible, but the termination of the agreement with Lubbers is not necessary to make these stores profitable. Auping did not convince the Dutch Court the quantitative requirements to adopt a new strategy were objectively applied and therefore Auping failed to come up with a weighty reason to justify the termination.

Dutch Court Zwolle March 23rd, 2012,IEPT20120323.

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