The agency agreement in The Netherlands: what does it mean?
In a recent ruling between the Dutch Federation of Travel Organisations (ANVR) on the one hand, and a group of airline companies on the other hand, the Court of Appeal had to address the question of whether there was an agency agreement. What sort of agreement is this and what can you arrange in such an agreement? Thomas van Vugt, a Dutch lawyer specializing in the agency agreement, explains what this term means.
The agency agreement: principal and commercial agent
The claimant in this case is the ANVR, an association that promotes the interests of the travel agencies that are members of the association. A Passenger Sales Agency Agreement was in effect between these travel agencies and a group of airline companies (the respondents). Based on this agreement, the travel agency concerned (the agent) can sell airline tickets issued by the airline companies, against compensation by the airline companies. This agreement can be considered an agency agreement.
No commission but compensation of the customer
At a certain point in time, the airline companies introduced a new sales model. This model no longer works along the line of commission payments, but offers the travel agencies the opportunity to reserve tickets for their customers against a ‘net fee’ with the airline companies with the possibility, if the travel agencies so wish, to charge a surcharge on the tickets themselves. The customers then have to pay this surcharge/compensation.
Dutch lawyer ANVR summons airline companies
The parties became involved in legal proceedings. In the appeals proceeding the case focused on whether this new proposed sales model can also be considered an agency agreement. Not according to the Court of Appeal. Under the new system, the travel agency does not receive commission from the airline companies, but can charge compensation for its services to the customers who buy the tickets. This means that there is no more mediation for which the airline company previously paid commission. There is an agreement between the travel agency and the customer where the customer pays the surcharge on the ticket price for the services rendered.
Agency: commission for mediation by commercial agent
In an agency agreement two parties, a seller of a product, often called the principal, and a commercial agent agree that the commercial agent, against a fee, shall mediate in the formation of sales agreements for the principal’s products. This means that the commercial agent does not sell his own products to his own account and risk, but that he receives commission for a part of the turnover that he has achieved for the principal. Therefore, the travel agencies previously acted as commercial agents for the principal, the airline companies. But this has been cancelled by the altered sales model.
Dutch contract lawyer specializing in the agency agreement
In this case, the introduction of the new agreement does not affect the fact that the travel agencies can in fact claim the goodwill payment that they are entitled to when the agency agreement is terminated. Stipulations to this effect for the benefit of the agent, are included in the law. This also includes the right to damage compensation for notice of termination that was not effected properly (wrongful notice of termination). Although this right was deviated from in the new sales model, in this case the Court of Appeal ruled that, while the agency agreement is in effect, no agreement can be made to the detriment of the agent in that he is no longer owed customer compensation. If necessary, please feel free contact Dutch law firm AMS for any legal issue relating to the agency agreement.