Such minimum purchase obligations are not to be confused with purchase- or sales-targets which create an obligation for the distributor to make its best efforts to realize such targets.
Generally the non-attainment of minimum purchase obligations indeed results in an early termination by the supplier. It is, however, less common that damages are claimed by the supplier for such non-attainment. The question is whether Dutch law provides for such a claim.
Article 74 of Book 6 of the Dutch Civil Code (“DCC”) provides that every failure in performance of an obligation shall make the defaulting party liable for the damages resulting therefrom, unless the default is not attributable to the defaulting party.
Except for situations where the non-attainment of a minimum purchase obligation is not attributable to the distributor (e.g. in cases where the supplier was unable to supply the ordervolume), the non-attainment therefore results in a liability of the defaulting distributor for the damages thus incurred on the side of the supplier.
In 2015 the District Court of Amsterdam rendered two judgements on this issue. In both judgements the principle of liability in case of non-attainment as described above was adopted.
According to the Court, it is however relevant that the supplier timely notifies the distributor that compensation for damages will be sought or at least that it reserves its rights to claim for payment of such damages. If the supplier fails to do so, this can result in a rejection of such a claim.
Within the above context, the Court ruled that the supplier was no longer entitled to claim damages for the non-attainment during one specific year because it had only started to complain about that non-attainment 13 months after the expiry of that specific year. With regard thereto, the Court made reference to article 89 of Book 6 of the DCC which provides that a party may no longer invoke a default in the performance of an obligation if it has not protested to the defaulting party promptly after it has discovered, or should have reasonably discovered, the default.
As regards the non-attainment by the distributor in another year, the Court ruled that the supplier’s conduct had created a justified expectation with the distributor that the supplier did no longer attach relevance to a strict compliance with the provisions of the contract. Accordingly, the Court decided that the principles of reasonableness and fairness made it unacceptable that the supplier held the non-attainment against the distributor.
The claim for payment of damages due to the non-attainment of the minimum purchase obligation in yet another year was however granted because the supplier had timely notified the distributor that it held the latter liable for the damages resulting from that non-attainment.
Jaap van Till, IDI agency and distribution country expert for the Netherlands