In the event of termination or expiry of the distribution contract, the provisions established at the time of the constitution are at the heart of the concerns. Is the termination procedure clear, does it avoid any legal implications in cartel and abuse of dominance disputes? These issues can be dealt with in advance, provided, of course, that they are discussed at the beginning of the business relationship. A distribution contract is a contractual agreement whereby a manufacturer or supplier allows an external supplier to sell/market its products to consumers in a given geographic area. We see daily the results of distribution contracts with branded products sold at sites located in two locations, although the manufacturer or supplier maintains a small centralized operation. Products on the market range from high-tech electronics to high-fashion products to simple household products. The distribution contract itself serves as a “behind-the-scenes” agreement between the supplier and the distributor, which then enters into contracts with retailers or organizations that are in contact with the general public. The distribution contract is generally defined by the global delivery agreement and deadlines, with the actual terms of the distribution agreement and exclusivity or non-exclusivity included in the contract. Therefore, no valid contract may be terminated by a party, unless it is terminated by mutual consent of both parties or by order of the court, where a unilateral party wishes such a denunciation or any other provision of the law. The only exception to this provision is section 272, which allows termination in the event of a delay, and section 271, which allows the parties to infer from this requirement of the law by expressly specifying it in their agreement. A manufacturer relies on a distributor to transport a product to its customers. The distributor depends on the manufacturer`s revenues to support its activities.
Both parties must agree on how the distributor will transport the products and how much the manufacturer will pay for the service. Where these agreements are no longer manageable, the parties can terminate the distribution contract and either establish a new agreement or terminate the relationship. A common area of concern during termination is the status of the extended customer base or client lists and how this information is handled if there is no specific clause to address the issue. It is clear that both parties have a stake in maintaining control or financial relations with the companies in the end-to-end distribution chain. The supplier wants to preserve the expanded market obtained by the distribution contract and distributors often want to restrict the use of customer information by suppliers.