Read the article here.
When drafting a distribution agreement, the parties should ensure that each party has the right to terminate the agreement under certain circumstances. These may be broad and general in nature such as termination upon the material breach of the agreement or upon default of the parties. The provisions may also be specific to the agreement and the parties to it.
The article describes a supplier that was given the right to terminate the distribution agreement if the distributor’s current chairman of the board died, suffered from a permanent incapacity, or ceased to be involved in the business of the distributor. This type of clause is inserted for the benefit of the supplier so that if the distributor incurs a change of control which the supplier does not endorse, the supplier is not required to continue the agreement with such new change of control. Although it may be important to incorporate some language specific to the parties’ needs, generally, broad termination provisions should also be included.
Read article here
Take away:
- Parties should include termination provisions which are tailored to their needs.
- The supplier will want to ensure that their distributor is giving focused attention on the distribution of their product, and may specifically want to approve the individuals responsible for distribution.
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Kathy Tomaszewski: Kathy earned an LL.B from the University of Western Ontario and was awarded a Gold Medal for the highest average in her graduating class. She articled as a law clerk to Hon. Bora Laskin, Chief Justice of Canada, Supreme Court of Canada. As a law student, Kathy also worked for one of the ‘Seven Sisters’, drafting proposed amendments to the Income Tax Act, and working in the litigation department. After receiving an LL.M. from Harvard University, Kathy taught law full-time for 10 years at the University of Western Ontario in the areas of constitutional, corporate and commercial law. In addition to teaching and publishing in these fields, Kathy acted as a consultant for the Ontario Securities Commission (researching proposed legislative changes), and the Ontario Human Rights Commission (sitting on Boards of Inquiry). Kathy also taught a course in Securities Regulation as an Adjunct Professor at the Law Faculty of the University of Toronto.While caring for her growing family, Kathy launched her own business in private educational therapy. Kathy has worked with many individuals challenged by learning difficulties and developmental delays, helping them to become independent learners. She has designed and taught courses in all subjects K-grade 8, with a specialty in logic, critical thinking, and writing skills. Kathy continues to act as a research consultant for small law firms on issues ranging from family and criminal law, to human rights and constitutional law. Kathy started with Clausehound in November 2014, and is the Company’s Knowledge & Research lead.