Terminating distribution agreements

Produced in partnership with Jonathan Smart of Shoosmiths

Practice notes

In-house

Terminating distribution agreements

Produced in partnership with Jonathan Smart of Shoosmiths

Practice notes

In-house

This Practice Note considers ways in which a distribution agreement can be terminated, including rights to terminate a distribution agreement under common law on notice, for breach or termination using the specific termination provisions in the distribution agreement. Guidance is provided on termination for breach of contract and how to give effective notice to terminate a distribution agreement. In addition, this Practice Note considers the types of termination rights that can be included in a written distribution agreement, what happens on termination and whether any ongoing obligations continue after termination including confidentiality undertakings and post-termination restrictions.

Distribution agreements, like other commercial relationships, are not intended to last indefinitely. They should be capable of continuing for as long as both parties receive mutual benefit from an arrangement and the arrangement complies with relevant legislation. A fully considered commercial arrangement should anticipate that, when it no longer serves a commercial purpose, it will require termination. The legal mechanism for termination should be a key drafting consideration in any distribution agreement.

Supplier considerations

A supplier will want to retain

Jonathan Smart

Partner, Shoosmiths

Jon heads up one of the Risk and Litigation Services teams and advises on complex, high value commercial disputes. Jon is recommended in the 2019 Legal 500 Guide and Chambers and Partners 2019. His practice has a particular emphasis in:- 1. IT and outsourcing disputes; 2. Contract and supply chain litigation; and 3. Corporate and shareholder disputes. Jon has a particularly strong reputation in the automotive and technology sectors and works with a number of leading automotive manufacturers and global IT companies including Volkswagen Group, IKEA, GAME and Honda Motor Europe. Jon is also a member of the Society for Computers and Law. Recent work includes:

Pursuing claims for a US technology company in respect of a multi-million pound dispute arising from a global IT outsourcing agreement;
Advising a leading FTSE 100 company in respect of a £40 million supply chain dispute involving a leading retail chain;
Acting for a global automotive manufacturer in a multimillion pound telecommunications dispute, including pursuing claim relating to the procurement process, contractual interpretation and exit;
Defending a leading IT company from claims exceeding £20milllion arising from an complex software development project; and
Acting in the matter of HHH v GGG in defending a £40 million claim arising from the payment of bribes to a foreign public official, which are the subject of a parallel criminal investigation by the Serious Fraud Office.

Jurisdiction(s):

United Kingdom

Key definition:

Distribution definition

What does Distribution mean?

In the Corporation Tax Acts (ctas) "distribution" means anything falling within of CTA 2010, s 1000.

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