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

Of course, this list is only a short selection of important contractual terms that you will find in an international distribution agreement. These agreements should always be tailored to the individual needs of each party. In light of all that has been said above, the need for an organized and binding written agreement between the parties – the manufacturer/supplier on the one hand, and the distributor on the other – seems obvious. In the absence of a written agreement, the intentions and behaviour of a party are interpreted according to the choice of the law in force. A distribution agreement concerns the sale of goods between commercial parties bound by a contract and, therefore, the traditional international rules, including contracts governing those relationships (. For example, the UN Convention on International Contracts for the Sale of Goods, Incoterms and European Directives governing the purpose of compensation for the victim), and the rules of legal choice (contract law, property rights, etc.). We emphasize that these universal rules can vary considerably in the interpretation of the concrete case and interpret differently the initial intentions of the parties in the different aspects of the confrontation between them. Nevertheless, manufacturers generally believe that the best approach in the event of their distributor`s bankruptcy is to depreciate that distributor and move on to the next one. One possible method to allow the manufacturer to withdraw from a distribution agreement and remain in compliance with federal insolvency law is to include in the agreement a provision requiring the distributor to maintain a certain degree of stable financial stability and specifies that failure to comply with such financial stability would warrant the producer`s termination. As long as the manufacturer is able to monitor the financial situation of the distributor and effectively obtain the termination before the distributor has filed for bankruptcy, the manufacturer will avoid any legal difficulties.

The problem, of course, is the feasibility of actually monitoring the distributor and stopping it in time. What matters is what happens to sales already booked at the end of the contract. This is probably the hotly contested issue and the one that leads to most litigation. The typical clause provides for the payment of commissions for orders already placed, but too often “reserves” existing orders by the manufacturer, affirms certain changes in them, and stipulates that no commission is due.