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Home » Services » Contractual legal services » Exclusive distributorship agreement

Exclusive distributorship agreement

Exclusive distributorship agreement

More often distributorship agreements provide that a manufacturer undertakes to deliver the goods to the exclusive distributor and to transfer to the latter rights to resell the goods in the contractual territory, as well as the distributor undertakes to buy the specified goods only from the manufacturer for the purpose of sales promotion in the contractual territory. 

Thus the exclusivity of the contract is considered as terms according to which the manufacturer is not entitled to sell the goods in the contractual territory by himself or by virtue of a third party except by the distributor and the distributor has no right to promote the products of other manufactures in the specified territory. The exclusivity may be related to the kinds of goods and to the certain classes of customer, however a prohibition on sales to certain classes of end-users is contrary to the Russian legislation.

While concluding an exclusive distributorship agreement the following is necessary to take into account:

Prohibition on sales to certain classes of customer. The provisions of a distributorship agreement often prescribe to sell the goods only to certain classes of customer (clients). However Russian court may declare invalid such restrictions related to certain classes of end-users as it is contrary to the mandatory rules of the Russian law: according to the clause 2 of Article 9 of the Civil Code of the Russian Federation: "The refusal of the citizens and of the legal entities to exercise the civil rights they possess shall not entail the termination of these rights, with the exception of the law-stipulated cases".

Even if the applicable law, chosen by the parties to the contract, is not the Russian law, there is a high possibility that Russian court will qualify the Article 9 of the Civil Code of the Russian Federation as a super mandatory rule which prevails over the applicable law to the contract (according to the Article 1192 of the Civil Code of the Russian Federation). Even more, the breach of Article 9 may give occasion to the refusal of Russian court to recognize and to enforce in Russia the decision of foreign court or arbitrage.

Rights to trademarks.   As far as the distributor is entitled to deal exclusively with the goods which were produced by the principal who has the title to these goods, the contracts usually provide for the rights of the distributor to trademarks, as well as the necessity to register such trademarks in Russia (clause 2 of the Article 1232 of the Civil Code of the Russian Federation). Provided that the best will be to conclude the separate license agreement between the owner of these trademarks and the distributor to protect the right of the first one in Russia, since the correspondent provisions of a distributorship agreement related to the trademarks are not always in compliance with the Russian law requirements concerned the license agreements (Articles 1235-1237 of the Civil Code of the Russian Federation).

We hope that this material helps you to clarify the issues related to the conclusion of an exclusive distributorship agreement.

We appreciate our clients and keep the confidentiality of the acquired information with due care.

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