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This article is about a lawsuit alleging fraud by the supplier, who controlled the distributor, in the form of exorbitant distribution fees. “The effect of Weinstein’s (the supplier) scheme was to utilize the Distribution Agreement to transfer to Weinstein, as a result of Weinstein’s ownership of the Debtor, the Debtor’s cash by charging the Debtor above-market rates in the Distribution Agreement instead of the net revenues that could be obtained if the Distribution Agreement reflected market terms and industry norms.”

Agreements which are overly-biased in favour of one of the parties are more likely to be terminated early, or result in financial difficulties for the ‘junior’ party.

Read the article here.

Take away:

  • One sided distribution agreements are less likely to succeed.


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