Termination Of Distributorship for Germany

Termination Of Distributorship Template for Germany

A comprehensive agreement governed by German law that formalizes the termination of a distribution relationship between a supplier/manufacturer and their distributor. The document addresses mandatory compensation requirements under German law, including the potential application of commercial agency provisions by analogy. It covers essential elements such as termination dates, settlement of accounts, return of inventory, handling of intellectual property rights, and post-contractual obligations. The agreement ensures compliance with German statutory requirements regarding distributor compensation claims and notice periods while providing a framework for an orderly transition of the distribution relationship.

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What is a Termination Of Distributorship?

The Termination of Distributorship agreement is essential when parties wish to formally end their distribution relationship under German law. This document is particularly important given Germany's specific legal requirements regarding distributor compensation claims, which often mirror commercial agency provisions. It's typically used when parties mutually agree to end their relationship, or when one party exercises their termination rights under the original distribution agreement. The document must carefully address mandatory compensation requirements, inventory handling, customer transition, and post-contractual obligations. Special attention must be paid to German law requirements regarding calculation of compensation claims (analogous to §89b HGB), notice periods, and the enforceability of post-contractual restrictions. The agreement serves as a comprehensive framework for ensuring an orderly transition while minimizing legal risks and potential disputes.

What sections should be included in a Termination Of Distributorship?

1. Parties: Identification of the supplier/manufacturer and distributor, including full legal names and registered addresses

2. Background: Reference to the original distribution agreement, its date, and brief context for the termination

3. Definitions: Key terms used in the agreement, including 'Effective Date', 'Termination Date', 'Territory', 'Products', etc.

4. Termination: Formal termination clause specifying the termination date and confirmation of mutual agreement to terminate

5. Compensation Claims: Addressing statutory compensation claims under German law, including any agreed settlement amount

6. Outstanding Payments and Returns: Provisions for settling accounts, returning inventory, and handling outstanding orders

7. Intellectual Property Rights: Cessation of IP rights usage and return of materials

8. Confidentiality: Ongoing obligations regarding confidential information

9. Post-Termination Obligations: Continuing obligations and responsibilities after termination

10. Governing Law and Jurisdiction: Confirmation of German law application and jurisdiction for disputes

What sections are optional to include in a Termination Of Distributorship?

1. Transition Assistance: Include when handover to a new distributor is required or customer transition needs to be managed

2. Non-Compete Obligations: Include when post-termination competitive restrictions are desired (subject to German law limitations)

3. Customer Data Transfer: Include when customer relationships and data need to be transferred back to supplier or to new distributor

4. Warranties and Service Obligations: Include when ongoing warranty or service obligations need to be addressed

5. Employee Matters: Include when there are employment implications or transfer of employees to consider

What schedules should be included in a Termination Of Distributorship?

1. Schedule 1 - Compensation Calculation: Detailed calculation of statutory compensation amount under German law

2. Schedule 2 - Inventory List: List of current inventory to be returned or purchased by supplier

3. Schedule 3 - Outstanding Orders: List of pending orders and their handling

4. Schedule 4 - Transition Timeline: Detailed timeline for implementation of termination activities

5. Schedule 5 - Marketing Materials: List of marketing materials to be returned or destroyed

Authors

Alex Denne

Head of Growth (Open Source Law) @ Genie AI | 3 x UCL-Certified in Contract Law & Drafting | 4+ Years Managing 1M+ Legal Documents | Serial Founder & Legal AI Author

Cost

Free to use

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