Some international distribution agreements contain exclusivity clauses. While not all of these agreements are exclusive, this is an issue that should be addressed in the treaty negotiations. It is important that the distribution agreement defines the products to be obtained. If you are the distributor, it is not a good idea to base the product description on a brand. What happens if the manufacturer changes its brand? Below are a few questions that need to be taken into account when developing the provisions of the product agreement. This article lists and discusses the rules of the thumb and the many aspects that must be taken into account and anchored in the definition and anchoring of the conditions of cooperation with the elected party, after a decision to market the products by the appointment of a distributor. Continental TV sued the theory that Sylvania`s behavior was a cartel violation. Until that date, traditional law stipulated that a producer was severely limited in the nature of the restrictions it could impose on a distributor. The idea was that the producer, since the distributor was an independent company, had no right to tell the distributor how to manage its business. This applies to the territory where the distributor can sell, the place from which it can operate and the prices it must charge.
In fact, the Sylvania case has changed all that, at least from the federal perspective in terms of cartels and abuse of dominance. The manufacturer is now free to limit the activity of the distributor in all these areas (except the price at which the distributor resells) as long as it can justify the restrictions on the analysis of the “rule of reason”. If the manufacturer has a legitimate commercial purpose to impose the restriction (which it almost always has), the courts will not challenge it. Another proposal is the short-term termination of the contract. The common law is that a trustee in bankruptcy or a “debtor in possession” throws himself into the same shoes as the trader, the contract being confirmed as an initial contract. If the original contract has been terminated with a period of thirty days, the new contract is terminated at the end of thirty days, although the distributor has declared bankruptcy. However, note once again that notification must be made before the bankruptcy application is registered with the distributor. Another potentially useful provision for the manufacturer would be one that would set out concrete reasons for termination.
Many state statutes allow termination as long as the producer has a “reasonable reason” to do so.