Distribution Agreement Applicable Law

A distribution contract is a commercial contract between a supplier of goods and a distributor of goods. The supplier may be a manufacturer or reseller of the products. In many cases, and categorically, the manufacturer/supplier invests considerable financial and other resources in the development and manufacture of the products covered by the distribution agreement. Therefore, with the exception of specific cases that warrant a waiver, it is necessary to substantially and operationally verify that the IP rights inherent in the products remain the exclusive property of the manufacturer/distributor. The importance of accuracy and the establishment of strong contractual protection of current and future intellectual property rights cannot be underestimated. The proper legal way to define the rights of the manufacturer/supplier as well as those of the distributor is to describe with the required precision the core and extent of the distribution rights and, as part of those rights, the scope of the product licence that the manufacturer/supplier has granted to the distributor and its customers. 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. Recent court proceedings have ruled that a manufacturer can impose a compromise clause in a distribution contract, even though the distributor`s basic right includes federal cartel laws. To some extent, this is a departure from previous legislation, which stipulated that requests for federal agreements were not deviating. In the past, it was thought that because antitrust laws are part of our public policy, the distributor must have the right to have such an application challenged in a federal court and that the courts must enforce those laws, regardless of the existence of an arbitration agreement. The law seems to be that as long as the merchant`s claim to cartels and abuse of dominance (usually based on a theory of resale price maintenance) does not permeate the whole dispute or thus overshadow all the controversy that it is unreasonable, the compromise clause can be applied in the contract.