Introduction

This “short form” is a simplified contract intended for parties who do not want a detailed distributorship contract, but prefer a shorter simpler form covering only the most essential issues.

It should be stressed that a “short form” contract will contain only provisions which cover the most typical issues arising between the parties and will not provide the choice of more sophisticated alternative provisions which might actually be more appropriate for some users. Indeed, some issues may arise which are not covered at all and they will be left to be determined by the courts.

If parties need more sophisticated solutions, they should use the “full” ICC Model Distributorship Contract (Sole Importer-Distributor) (Publication No. 776), which provides a more complete set of clauses and options (particularly through the annexes).

Many clauses of the model include the words “unless otherwise agreed”. This wording has been used in order to draw the attention of the users to the possibility of choosing other solutions which may be more appropriate for their specific needs. However, this does not mean that in the absence of the indication “unless otherwise agreed” the parties cannot agree otherwise.

Only in some cases, where parties should be sure that they really want a different solution (or where it may be difficult to understand what their real intention was) it has been preferred to use the words “unless otherwise agreed in writing”, in order to make clear that parties can depart from the contractual provision only by a written agreement.

Comments on specific points

Products (Box A-3-A). If the parties do not fill in A-3, the contract will cover all the products of the supplier (see Article 1.2). If the parties define the products in box A-3, they may refer to categories of products or to specific models. If the space is not sufficient, reference may be made to an Annex: e.g. by writing in box A-3-A “see Annex 1”.

Goodwill indemnity (Box A-6). In many countries the distributor is not entitled to a goodwill indemnity. However, since parties may wish to introduce this type of benefit, the model gives them the option (under box A-6) to make such a choice. If the parties decide to agree upon such “contractual” goodwill indemnity, such indemnity is assumed to be the only goodwill indemnity due to the distributor: this is why Article 11.2 expressly states that the goodwill indemnity under Article 11 cannot be cumulated with an indemnity possibly due under the applicable law.

Applicable law (Box A-12). The recommended solution is not to submit the contract to a specific national law, but to only refer to the general principles of law generally recognized in international trade together with the Unidroit Principles (see Article 12.1). In this case, parties should either not complete Box A-7 or should expressly choose alternative A-7-A. For more detailed information about the pros and cons of this a-national choice of law clause, you can consult the study drafted by a special task force of the CLP Commission: “Developing neutral legal standards for international contracts. A-national rules as the applicable law in international commercial contracts with particular reference to the ICC Model Contracts”. The publication in question is available for free download on the ICC store homepage: http://store.iccwbo.org/content/uploaded/pdf/Developing_Neutral_Legal_Standards_Int_Contracts.pdf.

However, since the above mentioned a-national solution is more appropriate when disputes are submitted to arbitration rather than to litigation in national courts, the choice of a specific national law will be preferable if the parties decide to have recourse to litigation before the ordinary courts (see Box A-8-B). In this case, however, the parties should check if and to what extent the contract conforms to the provisions of the applicable domestic law.

Law governing sales to the distributor (Article 12.2). As regards the sales contracts concluded between the supplier and the distributor, Article 12.2 provides that the sale contract will be governed by the United Nations Convention on Contracts for the International Sale of Goods (Vienna Convention of 1980, also called “CISG”), since such a solution appears the most appropriate for international contracts of sale. This does of course not prevent the parties to make a different choice, particularly within general conditions of sale (or of purchase) annexed to the distributorship contract.

Resolution of disputes (Box A-8). Box A offers the choice between arbitration and jurisdiction of ordinary courts. If no choice is made, ICC arbitration will apply, by virtue of Article 12.3. Parties should be aware that in certain countries the above clauses may be ineffective due to public policy rules reserving jurisdiction to local courts.

Reservation of title (Article 6.4). This Article states in general terms that the products delivered to the distributor remain the property of the supplier until complete payment is received. However, such reservation of title will only be effective to the extent it is permitted by the law governing transfer of title of the products which will normally be the law of the country where the goods are. Parties should consequently check if reservation of title will be valid in the distributor’s country and if any special requirements are needed for its validity and/or enforceability.

EU competition rules. As regards contracts within the European Union (or capable of producing significant effects within the EU) the EU competition rules and particularly Article 101 of the Treaty on the Functioning of the European Union (TFEU) are to be respected. Except for the case that the supplier has a market share of 30% or higher (in which case an individual exemption may be needed), in all other cases it will be sufficient that the contract complies with the block exemption regulation 330/2010. In this model solutions are proposed which meet the requirements of that regulation, particularly as regards sales outside the contractual territory (Article 7.1) and resale prices (Article 7.2). Moreover, since under the regulation non-competition obligations should not exceed 5 years, the maximum duration of the contract has been limited to 5 years (see Article 9.1).

Internet sales. If the supplier wishes to sell its products on the Internet through its own website or otherwise, parties should decide whether they should exclude such sales from the exclusivity granted to the distributor under Article 5 or look for other possible solutions. It has been considered that it was not appropriate to deal with this issue in this “short form”. A clause offering two alternative solutions to this issue can be found in Article 16.3 of the “full” ICC Model Distributorship Contract” (Publication No. 776).

PART I: Special Conditions

PART II: General Conditions

1. Territory and Products

1.1 The Supplier grants and the Distributor accepts the exclusive right to market and sell the products listed in box A-3-A , as well as any other products the parties may agree in writing to include in box A-3-A at any time during the term of this Contract (hereinafter called “the Products”) in the territory (if any) indicated in box A-3-B (hereinafter called “the Territory”).

1.2 If the parties have not completed box A-3-A, all products manufactured and/or marketed by the Supplier at present and in the future will be considered as “Products” for the purpose of this Contract.

2 Good faith and fair dealing

2.1 In carrying out their obligations under this Contract the parties will act in accordance with good faith and fair dealing.

2.2 The provisions of this Contract, as well as any statements made by the parties in connection with this distributorship relationship, shall be interpreted in good faith

3 Distributor’s functions

3.1 The Distributor sells in its own name and for its own account, in the Territory, the Products supplied by the Supplier.

3.2 Unless otherwise agreed in writing, the Distributor is not entitled to act in the name or on behalf of the Supplier, unless previously and specifically authorized in writing to do so by the latter.

3.3 The Distributor agrees to efficiently promote the sale of the Products in the Territory in accordance with the Supplier’s policy and shall protect the Supplier’s interests with the diligence of a responsible business person. The Distributor shall setup and maintain an adequate organization for sales and, where appropriate, after-sales service, with all means and personnel as are reasonably necessary in order to ensure the fulfilment of its obligations under this Contract for all Products and throughout the Territory.

3.4 The Distributor may, in exceptional cases in which it is not in a position to buy and resell, propose such business to the Supplier for a direct sale to the customer. For such activity as intermediary the Distributor will receive a remuneration to be agreed upon case by case. It is expressly agreed that such activity as intermediary to the extent it remains of an accessory character, does not modify the legal status of the Distributor as a trader acting in its own name and for its own account.

4 Undertaking not to compete

4.1 Without the prior written authorisation of the Supplier, the Distributor shall not represent, directly or indirectly, manufacture, market or sell in the Territory any products which are in competition with the Products, for the entire term of this Contract.

4.2 The Distributor is entitled to represent, manufacture, distribute or sell any products which are not competitive with the Products, provided it informs the Supplier in advance of such activity and provided the exercise of such activity does not prejudice the fulfilment of its obligations under this Contract.

5 Minimum purchase obligation

5.1 The Distributor undertakes to purchase, during each year, Products amounting to at least the minimum yearly turnover indicated in box A-5.

5.2 If the Distributor fails to attain within the end of any year the minimum purchase in force for such year, the Supplier shall be entitled, subject to giving one month’ s notice, at its choice, to terminate this Contract, or to cancel the Distributor’s exclusivity, or to reduce the extent of the Territory. This right must however be exercised in writing not later than two months after the end of the year in which the minimum yearly turnover has not been attained.

5.3 Unless otherwise agreed, if the contract continues in force after the last year for which the Yearly Minimum purchase is indicated in Box A-5, such Minimum shall also be applicable for each of the following years.

6 Conditions of supply - Prices

6.1 The Supplier agrees to supply all Products ordered, subject to their availability, and provided payment of the Products is adequately warranted. All sales of the Products to the Distributor shall be governed by the Supplier’s general conditions of sale, if attached to this Contract or otherwise communicated in writing to the Distributor. In case of contradiction between such general conditions and the terms of this Contract, the latter shall prevail.

6.2 The prices payable by the Distributor shall be those set forth in the Supplier’s price-lists as in force at the time the order is received by the Supplier with the discount indicated in box A-6 (if completed). Such prices are subject to change at any time, subject to one month’s notice.

6.3 The Distributor agrees to comply, with the utmost care, with the terms of payment agreed upon between the parties.

6.4 It is agreed that the Products delivered remain the Supplier’s property until complete payment is received by the Supplier. The Distributor agrees to cooperate with the Supplier by performing such actions as may be necessary for the protection of the latter’s rights.

7 Resale of the Products by the Distributor

7.1 The Distributor agrees not to actively promote sales (e.g. through advertising, establishing branches or distribution depots) into the territories reserved by the Supplier exclusively for itself or allocated by the Supplier to other exclusive distributors or buyers.

7.2 The Distributor is free to determine its resale prices with the only exception of maximum sales prices that the Supplier may impose.

8 Exclusivity

8.1 The Supplier shall not, during the term of this Contract, grant any other person or undertaking (including a subsidiary of the Supplier) within the Territory the right to represent or market the Products. The Supplier shall furthermore refrain from selling to customers established in the Territory, except as provided in Article 8.3.

8.2 The Supplier is entitled to sell the Products to customers outside the Territory, even if such customers intend to export the Products into the Territory, but may not actively solicit or otherwise provoke such sales to third parties with the purpose of circumventing the exclusivity under Article 8.1.

8.3 If box A-4 has been filled in, the customers listed in the box will be supplied directly by the Supplier.

9 Term and termination of the Contract

9.1 This Contract enters into force on the date of its signature and shall remain in force until terminated in accordance with Articles 5.2, 9.2 or 10, but shall in any case expire (if not terminated earlier) after a period of five years from the date of its entry into force. The parties agree to meet at least three months before the end of the five years’ period in order to discuss the possibility of entering into a new contract after its expiration.

9.2 This Contract may be terminated by either party at any time by notice given in writing by means of communication ensuring evidence and date of receipt (e.g. registered mail with return receipt, special courier), not less than 6 months in advance. The end of the period of notice must coincide with the end of a calendar month.

10 Earlier contract termination

10.1 Each party may terminate this Contract with immediate effect by notice given in writing by means of communication ensuring evidence and date of receipt (e.g. registered mail with return receipt, special courier), in case of a substantial breach by the other party of the obligations arising out of the Contract, or in case of exceptional circumstances justifying the earlier termination. Any failure by a party to carry out all or part of its obligations under the Contract resulting in such detriment to the other party as to substantially deprive it of what it is entitled to expect under the Contract, shall be considered as a substantial breach for the purpose of this Article 10.1. Circumstances in which it would be unreasonable to require the terminating party to continue to be bound by this Contract, shall be considered as exceptional circumstances for the purpose of this Article 10.1.

10.2 If a party terminates the Contract in accordance with this Article, and it appears thereafter that the reasons put forward by that party did not justify the earlier termination, the termination will be effective, but the other party will be entitled to damages for the unjustified earlier termination.

11 Applicable law - Arbitration

11.1 Unless otherwise agreed in writing (whether in Box A-7 or elsewhere), any questions relating to this Contract shall be governed, in the following order:

a) by the principles of law generally recognized in international trade as applicable to international distributorship contracts,

b) by the relevant trade usages, and

c) by the UNIDROIT Principles of International Commercial Contracts, with the exclusion of national laws.

11.2 Unless otherwise agreed in writing, the sale contracts concluded between the Supplier and the Distributor within this Contract will be governed by the United Nations Convention on Contracts for the International Sale of Goods (Vienna Convention of 1980, hereafter referred to as CISG).

11.3 The parties may at any time, without prejudice to Article 11.4., seek to settle any dispute arising out of or in connection with this Contract in accordance with the ICC Mediation Rules¹.

11.4 Unless otherwise agreed in writing (whether by completing Box A-8 or otherwise), all disputes arising out of or in connection with this distributorship Contract shall be be finally settled under the Rules of Arbitration of the International Chamber of Commerce by one or more arbitrators appointed in accordance with the said Rules

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