Skip to content


You Are Entering Into A Distributorship Agreement. You Will Consult In This Matter

Among other things, some of the key clauses you will usually find in an international distribution contract include products and territory, the obligations of the parties, exclusivity clauses, prorogation/rescission and dispute resolution. A closely related question is whether a distributor is “exclusive” in a given area. If a manufacturer appoints a distributor in Dade County, Florida, can that manufacturer either sell the products to Dade County itself or name another distributor on the same site? Should you discuss what happens when another company buys the manufacturer or distributor? In one case, for example, a trader was transporting a line of agricultural products from a producer who only made agricultural products. The dealer also sold tractors from another manufacturer. A large multinational company, which also manufactured a number of tractors, acquired the agricultural products manufacturer. The company then said it wanted its distributors to run a “complete line,” including tractors. This situation is often difficult to manage in advance in a distribution company, but this case highlights one of the things that can happen to create a dispute. The end result was that the manufacturer terminated the distributor because it did not treat a “complete line.” The distributor complained of different theories and lost on each of them. (see Smith Machinery Company, Inc.

v. Hesston Corporation, 878 F.2d 1290 (10. Cir. 1989) and Continental TV v. GTE Sylvania, Inc., 433 U.S. 36 (1977).) If the distributor decides to represent a competing product, the product must be in the contract or the manufacturer may later invoke that breach and sue for breach. It is equally important that, if the products offered by the manufacturer evolve over time, either by improvement or by new products, the contract must provide for the impact this may have on the distributor`s existing lines. It is not cheap to create a new ground. Often months or even years are necessary to inform potential customers of the value of the product, and during this period, few sales take place and the distributor works for next to nothing hoping for a possible market share. A savvy distributor will insert in the contract a “start-up period” to develop the market, so that there can be no termination of the distribution contract for a sufficiently long period. The worst thing that can happen is that after all this victim, we are just beginning to develop a market – and the notion of contact is over.

There are many different business requirements that a manufacturer/supplier may require from a distributor that it intends to name and which remains for the duration of the agreement. For example – and the list is not exhaustive – the establishment of authorisations of authority for the marketing of products in the market in question; Setting up a product marketing system Advertising attending conferences Employing professional staff Technical/professional customer service; a warranty and repair system, etc. Often, the definition of such conditions is highly appropriate from the outset by the nature and nature of the distributor and, above all, by its intention and willingness to establish a long-term distribution relationship between suppliers and distributors.

Posted in Uncategorized.