The word « liquidated » simply means « fixed » or « agreed. » The amount of money to which the distributor is entitled by the manufacturer in the event of termination is indicated in the liquidation clause in the contract itself and is not left at a later date in the negotiation. As long as these liquidated damages are reasonable, they are applied. However, the compensation clause that can be liquidated would probably not deprive the distributor of an infringement obligation, given that antitrust legislation is a matter of public policy and the producer really cannot do anything to deprive the distributor of the right to make such a claim. Another potentially useful provision for the manufacturer would be one that would set out concrete reasons for termination. Many state statutes allow termination as long as the producer has a « reasonable reason » to do so. Certain conditions that may be part of a distribution agreement to justify its termination are: This agreement and the exhibition attached to it (which is expressly included in this reference) include the full and comprehensive agreement between the parties regarding the purpose of this agreement. It replaces all previous negotiations, submissions and proposals, in writing or any other means, relating to its purpose. Changes, amendments or amendments to this agreement must be established by a text signed by the authorized representatives of both parties. The distributor recognizes and accepts that any failure of the supplier to impose at any time or for a certain period of time is not considered or interpreted as a waiver of these provisions or as the supplier`s right to apply each of these provisions. This agreement can be concluded in several counter-pieces, each being considered original. The provisions of this contract, which are not fully met by the express terms of this agreement for the duration of the agreement, remain beyond the termination of that agreement, to the extent that this is applicable. 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. Distribution agreements are an integrated instrument for establishing a relationship between a distributor and a supplier. A well-written agreement can help develop this relationship. The agreement cannot extend the life of a relationship as soon as the relationship expires. A poorly written agreement often results in legal litigation, which in turn consumes management time, financial resources and the involvement of lawyers, courts and arbitration proceedings. A well-written agreement can eliminate resource expenditures for these non-productive activities and encourage the distributor and manufacturer to do their business at the end of the relationship. Limit liability limitation: in most jurisdictions, the manufacturer is responsible for the damage caused by the use of the products. Some agreements try to transfer that responsibility to the distributor, but if they are tested by the courts, they probably will not hold. Therefore, the right way to resolve the liability risk is to formulate an effective compensation mechanism that limits the extent of your liability. Such a mechanism should limit your liability in terms of both amount and time and be supported by appropriate insurance coverage.