Relationships between manufacturers and distributors are organic. They were born. They`re growing. They`re growing up. They`re maturing. They`re disintegrating. They ended up perishing. External factors regularly put the distributor and manufacturer under pressure. These pressures sometimes change the distribution agreement. If the agreement allows for changes later this year, there are few problems. However, if the agreement allows for changes only once a year, one or both partners must face undue pressure until the agreement can take such an annual change into account.
The best distribution agreements allow for changes during the year. Any communication that may or will be provided under this agreement must be addressed to the address listed below or to the address given in writing by the parties by airmail or cable. If one of the parties has changed its address, it is notified in writing to the other party. All notifications are also considered to be on the date the mail is filed. Most distribution agreements involving experienced dealers and manufacturers allow termination for reasons and conveniences (or not at all). Less experienced partners sometimes try to allow the dismissal of a limited number of specific cases. Termination for reasons is sometimes simple and undisputed, such as when a partner declares bankruptcy. However, partners sometimes disagree on the presence of the cause. Partners often disagree on the responsibility of the cause.
Problems with distribution agreements are often identified after negotiations and agreements have been signed, even if agreements have been verified by corporate or outside lawyers. How did we get to this point? Too often, lawyers remove incriminating clauses, but are simply not aware of industry standards. They do not understand the most common agreement problems. It is a good practice to have the agreement verified by a lawyer and an industry professional. If your company lacks an industry expert who knows the distribution agreements, such support should be sought.