Herbalife was entitled to terminate distributor over manipulation of its marketing plan: no reinstatement in summary proceedings
Thomas van Vugt In brief
- In January 2026, Herbalife terminated its agreement with a distributor, giving six months' notice. According to Herbalife, he had manipulated the reward system through his own upline and downlines.
- The preliminary relief judge in Amsterdam finds that Herbalife prima facie had sufficiently compelling grounds. Reinstatement of the membership is refused.
- The claim for damages of over €4,500 per month is also rejected. The distributor is ordered to pay the costs of the proceedings.
On 6 November 2026, the preliminary relief judge of the Amsterdam District Court dismissed the claims brought in summary proceedings by a Herbalife distributor seeking reinstatement of his membership (ECLI:NL:RBAMS:2026:10969). The judgment shows how high the bar is for anyone seeking, in summary proceedings, the continuation of a terminated continuing performance contract. Thomas van Vugt, lawyer specialising in contract law, discusses the judgment.
What was the case about?
Herbalife does not sell its products in shops, but through a network of independent distributors. A distributor who recruits other distributors becomes their "upline" and receives royalties on the sales of those "downlines". Herbalife’s Rules of Conduct prohibit organising purchases with the primary aim of inflating those rewards.
The distributor had been a member since 2020. His mother-in-law was his upline, and from 2024 he had two downlines. Through his own company, he managed their webshops and Google Ads campaigns. According to Herbalife, this shifted sales from him to his downlines, while total sales remained the same. Herbalife also pointed to orders placed from the same device and to hundreds of shared shipping addresses. By letter of 7 January 2026, Herbalife terminated the agreement with effect from 7 July 2026. The distributor disputed all allegations and claimed reinstatement of his membership and damages.
Termination is allowed, but not without limits
The preliminary relief judge first notes that a claim for reinstatement in summary proceedings can only succeed if it is sufficiently likely that the court hearing the case on the merits will rule in the claimant’s favour. The judge then sets out the framework for continuing performance contracts. A contract for an indefinite period can, in principle, be terminated. However, reasonableness and fairness may require that there are sufficiently compelling grounds for termination, that a notice period is observed or that compensation is offered (Article 6:248 Dutch Civil Code). The Supreme Court previously set out this framework in, among others, ECLI:NL:HR:2018:141.
Notably, under its own terms and conditions, Herbalife could terminate "at its own discretion" in the event of a breach. The preliminary relief judge does not leave it at that, but assesses whether there were sufficiently compelling grounds.
The distributor did not substantiate his defence
Prima facie, there were such grounds. The distributor acknowledged that sales had shifted, but attributed this to his wish to work less. According to the preliminary relief judge, he thereby failed to make clear that his conduct was in fact permitted. If he disputed that he had promoted his downlines’ webshops through Google Ads, he should have explained what work he did on those campaigns and webshops (para. 4.7). He did not do so. The fact that the downlines struggled to answer simple questions about their own businesses reinforced this picture.
Herbalife’s diligence also played a role. The distributor had attended a training session on this prohibition in 2024. Herbalife discussed the matter with him in early 2025, shared its findings in June 2025 and gave him the opportunity to respond. Given the six-month notice period, the preliminary relief judge considered it "highly unlikely that the court hearing the case on the merits will not consider this termination legally valid" (para. 4.9, our translation).
No damages
A monetary claim in summary proceedings requires that both the existence and the amount of the claim are sufficiently plausible. Since the termination is expected to stand, there is no loss eligible for compensation. Both heads of damage, €2,884.29 and €1,674.06 per month, are rejected.
Conclusion
Anyone seeking reinstatement of a terminated distribution or cooperation agreement in summary proceedings must refute the other party’s allegations specifically and with supporting documents. A plausible-sounding explanation is not enough if one’s own activities are not made transparent. Conversely, the terminating party should investigate carefully, hear the other party and observe a reasonable notice period.
Read more about the termination of distribution agreements in an earlier blog. AMS Advocaten previously acted for FlixBus in similar summary proceedings concerning the termination of a continuing performance contract. There, too, the preliminary relief judge refused the relief sought: the bus operator had breached a contractual safety standard despite warnings.