Distributorship Agreement Laws

Distribution agreements may infringe competition law and caution should therefore be exercised in their formulation. The termination provision is particularly important in the case of a cancellation contract. The exact notice period required before the termination takes effect must be clearly defined in the agreement. A manufacturer usually wants a short notice period. a distributor a longer one. Reviewing a company`s distribution agreements, whether or not it`s a large company, can save time and money in the long run. – The conditions under which the supplier and the distributor may terminate the contract and the maximum liability provided for in the agreement. Exclusive distribution: in an exclusive distribution agreement, the supplier undertakes to sell its products only to a distributor for resale in a given area. At the same time, the distributor is usually limited in its active sale in other (exclusively allocated) areas. Potential risks of competition are above all the reduction of intra-brand competition and market sharing, which may in particular be price discriminatory. If most or all suppliers apply exclusive distribution, this can lessen competition and facilitate collusion, both at the supplier level and at the distributor level.

Finally, exclusive distribution can lead to the anticipation of other distributors, thus reducing competition at this level. At least the merchant should look for a “three and three.” That is, a guaranteed and non-cancellable contract for three years, which will be extended by three years if the criteria were available. It is preferable to conclude a permanent distribution agreement in which the contract is automatically renewed if certain criteria are established, as long as the turnover is maintained at this level. Recent court proceedings have determined that a manufacturer can impose an arbitration clause in a distribution agreement, even if the dealer`s basic right includes federal cartel laws. To some extent, this is a departure from the previous law, which stated that federal cartel claims could not be subject to arbitration review. So far, it has been accepted that since antitrust laws are part of our public order, the merchant must have the right to have such a claim dealt with in federal court and that the courts must enforce these laws regardless of the existence of an arbitration agreement. However, the law appears to be such that, as long as the distributor`s antitrust law (usually on the basis of a theory of the fixing of resale prices) does not permeate the entire dispute or overshadow the entire dispute to the point of being inappropriate, the arbitration clause of the contract cannot be applied. In other words, the manufacturer can insist that the distributor settle disputes between them. Generally speaking, the arbitration clause will favour the manufacturer, since it will not take away from the dealer the largest club, namely the anti-dominant claims, in which the concessionaire, if successful, will be able to recover three times as much damages and attorneys` fees. Indeed, recent comments from lawyers in legal education programs have shown that they are now in favour of including arbitration clauses in distribution agreements almost everywhere.

From the trader`s point of view, it is probably not particularly advantageous to have such a clause in the contract, but on the other hand, it may not be so bad. Indeed, if the trader feels that all he wants is fair treatment from the manufacturer and not a “pound of meat” based on three damages and attorneys` fees, arbitration may be a way to obtain this type of “gross justice”, the manufacturer should not voluntarily offer it. . . .