Distribution law is a sub-branch of economic law which is a branch of private law.
Distribution law comprises the legal framework governing the commercial relationship between the manufacturer (supplier) and the retailer. The aim of distribution law is to align the requirements of free trade with the objective of protecting the state of competition and protecting SMEs from possible abuses by larger economic players.
Indeed, influences exist between the producer, the distributor and the consumer in all commercial relationships. These relationships are governed by numerous legal aspects. It is the distribution law that regulates the commercial relations between these different economic actors. Clear and precise rules must be established to guarantee the best possible environment for the development and distribution of your products and/or services.
In Belgium, there are laws that are particularly specific to distribution law. These laws are mainly derived from Title 2 of Book X of the Code of Economic Law (CDE), which is entitled “Pre-contractual for commercial agent agreements” and Title 3 of the same book, entitled “Unilateral termination of exclusive sales concessions agreements of indeterminate duration”.
These laws set the framework within which your company must conduct its distribution strategy. It is essential that you comply with distribution law regulations and that your strategy limits the risks associated with a distribution contract (lawsuits, claims for damages, etc.).
To this end, our team of experts has solid experience at both national and European level. In case of litigation, we are able to represent and defend you before national and European courts (European Court of Justice, European Commission, etc.).
Whether you are a manufacturer, importer or distributor, our multidisciplinary skills in all areas of law enable us to find tailor-made solutions to your legal problems in the field of distribution and the rules applicable to distribution contracts.
Our lawyers specialized in distribution law are competent to analyze your commercial situation in order to guide you in the choice of a distribution network.
1. Franchise agreement
It is a contract in which the franchisor transmits know-how and business methods to independent franchisees (the trader) in return for a fee.
2. The sales concession contract
This is a contract in which the dealer (distributor) buys and resells the licensor’s (manufacturer’s) products in his name and on his behalf.
3. The commercial agency contract
It is a contract in which the commercial agent (distributor) has the power to negotiate and conclude contracts for the sale or purchase of goods or services on behalf of the principal (manufacturer). Commercial agency contracts are strictly regulated in Title 1 Book X of the Code of Economic Law “Commercial Agency Contract” which aims to protect the interests of both principals and commercial agents.
4. Selective and exclusive distribution
Selective distribution is a contract in which the licensor (supplier) selects authorized distributors (dealers) who are the only ones who can buy and resell its products or services. The difference with exclusive distribution is that the distributor has the exclusive right to sell the products or services in a certain geographical area.
These commercial contracts make it possible to define a distribution network model, although these networks are all different from one another because they depend on the obligations entered into between the various parties.
This may include, for example, exclusivity obligations in various areas:
• Customer exclusivity
• Territory exclusivity
• Exclusive supply
• Exclusive supply
An exclusivity clause or a non-competition clause must then be signed to protect your interests. Our team of lawyers covering all jurisdictions, a lawyer in contract law and specialist in distribution law will then be appointed to negotiate your various obligations in order to produce a distribution network optimized in terms of risks for your commercial activities.
More specifically, we are also competent in ;
• Negotiate and draft your distribution contracts
• Monitor the execution of your contracts and check if clauses are not threatened/violated
◦ Territorial exclusivity
◦ Sales targets
◦ Your supplier selection criteria
• Organize and verify your contractual relations from a legal point of view
• Provide advice on exclusivity and selective distribution
• Preventing and managing disputes between parties to a distribution contract and advising you on how to terminate a contract
◦ Advance notice
◦ Stock takeovers
◦ Abrupt termination of commercial relations
• Provide advice on the termination of the contract
Since distribution networks fall under jurisdictions other than distribution law, we are able to analyse and manage other legal matters closely related to distribution law. This may include, for example;
Real estate law
Commercial and contract law
Competition law and more specifically vertical agreements
Intellectual property law
Indeed, to establish a distribution network, it is necessary to be specialised in distribution law on the one hand, and in contract law on the other, in order to apply all the relevant regulations. Intellectual and industrial property law also plays a role, as the distribution of products or services is also covered by trademark law (registration of trademarks, company names, trade names, geographical indications, etc.).
The application of distribution in all its aspects falls under many other branches of law. It would therefore be wise to call upon a law firm such as GOlegal in order to cover all these jurisdictions in one. Our multidisciplinary expertise allows us to guide you through all the legislation covering distribution law.
Regulations on distribution contracts may include;
• Commercial transparency that allows authorities to monitor ;
◦ The negotiations
◦ Pricing methods
◦ Billing terms and conditions
◦ Payment deadlines
◦ General Terms and Conditions of Sale (GTCS)
Failure to comply with these rules may expose your company to civil or administrative penalties.
• Restrictive competition practices (under European law) which ensure fair competition between companies in order to give consumers a choice. In Belgium, these are ;
◦ The cartels
◦ Abuse of dominant position (by the large-scale distributors)
◦ Abuse of economic dependence
Failure to comply with these rules may expose your business to criminal and civil penalties.
If you wish to benefit from a great expertise in the field of distribution law with the help of lawyers adapted to your problems and able to offer you a tailor-made solution, do not hesitate to contact us. We can be reached by e-mail and on our website GOlegal and will contact you within 24 hours.