Under Turkish Law, there are several types of agreements creating distribution channels or networks for manufacturers. The basic and common ones are agency contracts, distribution contracts (exclusive or non-exclusive), commissioning, and brokerage contracts. This brief provides general information regarding exclusive distributorship agreements which is one of the most preferred relationship type for cross border product distribution.
Exclusive Distributorship Agreements
Exclusive distributorship agreement is not specifically defined in Turkish legislation. As the characteristics and provisions applicable to this contract type are not specifically regulated, generally accepted principles and opinions in the doctrine, comparative application of the provisions regarding similar agreements, Turkish court precedents, foreign references, and German and Swiss courts’ decisions bear great importance in the assessment of this type of the agreements.
An exclusive distributorship agreement is accepted as an atypical agreement and defined by the doctrine as a continuous framework agreement that regulates the legal relationship between the manufacturer and the distributor, according to which, the manufacturer undertakes to dispatch all or part of its products to the sole distributor in order to be sold by him exclusively in a geographic region and in consideration thereof, the sole distributor undertakes to sell the products in his own name and account and to conduct activities in order to increase sale volume of the products.[1]
The difference between a lasting purchase/sale contract and the sole distributor agreement is alleged to be that the distributorship agreement creates a continuing obligation and the distributor is deemed liable to increase the sale volume.[2]
[1] Dr. Gökyayla, Cemile Demir, Exclusive Distributorship Agreements, page 7 [2] Önür, Kemalettin, Exclusive Distributorship Agreement, page 8.)
Obligations of the Manufacturer under Exclusive Distributorship Agreement:
- Obligation to accept purchase orders from the distributor,
- Loyalty obligation,
- Obligation not to make sales to the territory granted to the distributor,
- Liability to guarantee the quality of the products.
Obligations of the Distributor under Exclusive Distributorship Agreement:
- Obligation to purchase the products subject to the agreement,
- Obligation to increase the number of sales,
- Obligation to protect the interests of the manufacturer,
- Obligation not to compete with the manufacturer.
For further information please contact onder.budak@budaklegal.com
