A Legal Study on the Distribution Agreement
Date Issued
2010
Date
2010
Author(s)
Lin, Chia-Ying
Abstract
As the international market vigorously thrives, new kinds of contracts were created. ”Marketing contracts” are agreements among economic actors of different levels in the marketing chain. By integrating the ”Middleman” to the sale system, supplier and the middlemen deeply collaborate.
Obviously, the economic importance of distribution agreements is enormous since they form the connection between producers and retailers. As a reseller, a distributor takes some commercial risk from the supplier. Distribution agreement is a business contract with remuneration, and mixed with service, licensing and supply contracts. From the viewpoint of the comparative law, a distribution contract is a framework agreement, which provides the context for subsequent contracts. As a framework agreement, a distribution contract specifies the basic rights and obligations between distributors and suppliers.
According to “The ICC Model Distributorship Contract (Sole Importer/Distributor)” and “Principles, Definitions and Model Rules of European Private Law”, the obligations to cooperate is fundamental. It requires the parties to perform their respective efforts actively and loyally in order to achieve the objective of the contract. For example, the distributors should promote and sell the goods, provide proper storage and spare parts of products, information and keep confidentiality. On the other hand, the suppliers should supply and advertise goods, provide information and keep confidentiality. If the parties agree to sign an exclusivity clause, they normally have a closer relationship, which requires a higher degree of collaboration and royalty to each other.
A distributor contract ends upon the expiry of its term or by the termination. There are two kinds of the terminations. First, the parties to a contract for an indefinite period may terminate the contract by giving notice in advance. Second, the parties may terminate the contract pursuant to the agreement clause, for example, when one party’s default is fundamental. In certain countries, after the termination of the contract, the aggrieved party is entitled to damages. In addition, either party is entitled to goodwill compensation under the principal of fair
Subjects
Middleman
distribution agreements
framework agreement
subsequent contract
The ICC Model Distributorship Contract (Sole Importer/Distributor)
Principles
Definitions and Model Rules of European Private Law.
Type
thesis
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