|
| |
 |
|
| Talacker 41, 8001 Zurich, Switzerland, Phone: +41 43 443 72 00, Fax +41 43 497 22 70, info@amcham.ch |
|
| what we do |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Site contribution |
| Date: |
April 2006 |
| Prepared by: |
| Ulrich Eisenring, Corporate Counsel |
|
| Basilea Pharmaceutica Ltd. |
| Grenzacherstrasse 487 |
|
| 4058 Basel |
|
| Phone: |
|
+41 61 606 11 11 |
| Fax: |
|
+41 61 606 11 12 |
|
|
|
|
|
|
|
| Site history |
| Date: |
April 2006 |
| Prepared by: |
| Ulrich Eisenring, Corporate Counsel |
|
| Basilea Pharmaceutica Ltd. |
| Grenzacherstrasse 487 |
| 4058 Basel |
|
| Tel. |
|
+41 61 606 11 11 |
| Fax |
|
+41 61 606 11 12 |
|
|
|
|
|
|
Summary |
|
| |
|
Distribution agreements play an important role in today’s business environment. A supplier of goods may benefit from the know-how and sales & marketing organisation of a distributor in a certain territory, which enables the supplier to develop new markets or to optimise its sales and marketing activities. The supplier does not invest in an own sales and marketing organisation and does not bear the marketing risk. The distributor benefits from the brand awareness and, in case of an exclusive distribution agreement, of a lack of competition related to the goods of the supplier. The economical importance of such contractual arrangements cannot be underestimated, however, the Swiss Code of Obligation does not provide a specific statutory rules on distribution agreements. Nevertheless, the Federal Law on Cartels contains specific rules and restrictions for distribution agreements.
Although, the content of a distribution agreements strongly depends on the branch of business and thespecific market in the territory, the characteristic elements of a distribution agreements include the subscription right of the distributor for certain goods of the supplier in a fixed period of time, a right to distribute certain goods in a certain territory (exclusively or non-exclusively), a duty to perform sales promotions, the right to use the trademark or other intellectual property rights and, very often, minimum purchase requirements. The distributor operates in its own name, on its own account and bears the collection risk. The agreement can be qualified as a framework agreement with successive delivery of goods whereby the individual delivery qualifies as a purchase agreement or a contract for work.
In practise, the legal distinction between distribution and agency agreements plays an important role. Contrary to the agent, the distributor acts in its own name and on its own account. Therefore, the distributor creates its own customers, which does not ent |
|
|
|
|
Applicable Law |
|
| |
|
|
|
|
|
Detailed Information |
|
| |
|
| Like in other jurisdictions (e.g. Germany, Italy, France and Austria), the distribution agreement is not laid down as statutory rules. Although specific statutory rules do not exist, various statutory rules of other contracts apply analogous to distribution agreements: |
|
| Distribution agreements have similar elements comparable to a purchase agreement or contract for work, an agency agreement and a mandate. The purchase elements are given by the right to buy certain goods from the supplier (successive delivery of goods) against payment. Regarding delivery of goods, payment, requirement to give notice of defects and warranties, the specific rules on purchase agreements (or contract for work) apply analogous. The duty to perform sales promotion in a defined territory qualifies as elements of a mandate and/or agency. Additionally, the rules regarding the termination of an agency agreement also apply analogous to distribution agreement as long as the parties have not agreed on different rules related to the termination of the agreement. The Swiss Code of Obligations states for agency agreements that a contract for an undefined time period may be terminated within the first year at the end of the following calendar month and after one year with a two months notice to the end of each quarter. Additionally, an extraordinary right to terminate the agreement for important reason exists for both the supplier and the distributor. The extraordinary right of termination is compulsory law. The distributor has the obligation to keep business information of the supplier during and after the termination of the agreement confidential and is not entitled to use such business information. Although a distribution agreement may contain a non-compete obligation during the contractual period, a non-compete obligation of the distributor after termination of the agreement may only be concluded analogous to applicable rules for agency agreement. Therefore, the parties cannot agree on stricter non-compete obligations for the distributor. A non-compete obligation after the termination of the distribution agreement requires a specific reasonable compensation of the distributor. In this regard, it must be reminded that additional restrictions may apply due to competition law setting strict limits for non-compete clauses. In case of non-performance related to the sale, delivery, payment and acceptance of the goods the specific rules on purchase agreement apply analogous whereby the distributor is not entitled to withhold the purchase price for the delivery of the goods if the supplier violates the exclusive right of the distributor. |
|
| As outlined above the analogous application of certain statutory rules on distribution agreements cannot be considered as detailed, therefore, it is strongly recommended that the distribution agreements clearly defines the obligations of the parties and the legal consequences in case of non-performance or termination of the agreement. Typically, a distribution agreement includes the following clauses: |
|
|
Exclusive or non-exclusive delivery obligation for a certain territory |
|
Prices and price changes |
|
Minimum purchase requirements |
|
Forecast/order process/lead time |
|
Notice of Defects |
|
Delivery terms and transfer of risk |
|
Distributor resells the goods in its own name and its own account |
|
Sales activities on a specific group of customers in the territory |
|
Sales promotion and activities of the distributor |
|
Support of sales promotion by the supplier |
|
Reporting of sales activities and achievements |
|
Resale price recommendation (if allowed under the Law on Cartel) |
|
Selling restriction for the supplier in the territory |
|
Minimum stock requirements |
|
Storage and handling |
|
Use of the trademark |
|
Support of the distributor in case of a violation of the trademark or other intellectual property rights of the supplier |
|
Customer service and product warranties |
|
Non-compete obligation |
|
Confidentiality |
|
Duration of the agreement |
|
Termination |
|
Purchase of distributor’s customer lists |
|
Resale of goods on stock by the supplier after termination |
|
Compensation for goodwill created by the distributor |
|
Applicable law and place of jurisdiction |
|
| Although it is generally recognized that exclusive and non-exclusive distribution agreements play an important role for the functioning of the economy, certain restrictions to competition for vertical agreements violate the Federal Law on Cartels (for detailed information, please see KARTELLRECHT). Namely, price fixing or minimum prices for resale, restrictions on production, quantities of supply and delivery, sales restrictions (by customer group or territories), non-compete clauses for more than five years during the agreement and/or one year after the termination of the agreement may fall under these restrictions, which are not allowed under the Federal Law on Cartels. Additionally, it must considered that European competition law may even apply for distribution agreements only related to the Swiss domestic market and governed by Swiss law if the distribution impacts the market in the European Community as defined under the competition rules of the EC. |
|
|
|
|
|
Frequently Asked Questions |
|
| |
|
|
Do I need to compensate the distributor for its customers in case of termination? |
|
Under Swiss law, the distributor does not receive a compensation for its customers. However, it must be considered that if the distributor is located outside of Switzerland, it could be that compulsory local law regarding the compensation of the distributor may apply. In various European countries a compulsory compensation of the distributor exists if a distribution agreement is terminated. |
|
|
Do I have to consider EU competition law? |
|
In the event a distribution agreement between parties impacts the common market in the European Community, the EU competition law is applicable, independently if the registered places of business of the contractual parties are within or outside of the European Community. |
|
Is there a right to withhold performance? |
|
Given that a distribution agreement is qualified as a successive delivery of goods against payment, the contractual party has generally the right to withhold performance limited to the specific performance. |
|
|
Do I have to perform if the other contractual party is insolvent? |
|
Accordingly to Article 83 CO, the contributor may withhold performance until the insolvent party has secured its consideration. |
|
|
|
|
|
Useful Links |
|
| |
|
|
|
| › top |
|
|
|
|
|
|
|
|
