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Swiss Code of Obligations
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Swiss Civil Code
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Federal Law on Cartels
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Federal law on Product Liability
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Federal Law against Unfair Trade
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Vienna Convention on Sales of Goods
Related publication:
Distribution Agreement
Like in other jurisdictions (e.g. Germany, Italy,
France and Austria), the distribution agreement is not laid down as statutory
rules. Although specific statutory rules do not exist, various statutory rules
of other contracts apply analogous to distribution agreements:
Distribution agreements have similar elements comparable to a purchase agreement
or contract for work, an agency agreement and a mandate. The purchase elements
are given by the right to buy certain goods from the supplier (successive
delivery of goods) against payment. Regarding delivery of goods, payment,
requirement to give notice of defects and warranties, the specific rules on
purchase agreements (or contract for work) apply analogous. The duty to perform
sales promotion in a defined territory qualifies as elements of a mandate and/or
agency. Additionally, the rules regarding the termination of an agency agreement
also apply analogous to distribution agreement as long as the parties have not
agreed on different rules related to the termination of the agreement. The Swiss
Code of Obligations states for agency agreements that a contract for an
undefined time period may be terminated within the first year at the end of the
following calendar month and after one year with a two months notice to the end
of each quarter. Additionally, an extraordinary right to terminate the agreement
for important reason exists for both the supplier and the distributor. The
extraordinary right of termination is compulsory law. The distributor has the
obligation to keep business information of the supplier during and after the
termination of the agreement confidential and is not entitled to use such
business information. Although a distribution agreement may contain a
non-compete obligation during the contractual period, a non-compete obligation
of the distributor after termination of the agreement may only be concluded
analogous to applicable rules for agency agreement. Therefore, the parties
cannot agree on stricter non-compete obligations for the distributor. A
non-compete obligation after the termination of the distribution agreement
requires a specific reasonable compensation of the distributor. In this regard,
it must be reminded that additional restrictions may apply due to competition
law setting strict limits for non-compete clauses. In case of non-performance
related to the sale, delivery, payment and acceptance of the goods the specific
rules on purchase agreement apply analogous whereby the distributor is not
entitled to withhold the purchase price for the delivery of the goods if the
supplier violates the exclusive right of the distributor. As
outlined above the analogous application of certain statutory rules on
distribution agreements cannot be considered as detailed, therefore, it is
strongly recommended that the distribution agreements clearly defines the
obligations of the parties and the legal consequences in case of non-performance
or termination of the agreement. Typically, a distribution agreement includes
the following clauses:
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Exclusive or non-exclusive delivery
obligation for a certain territory
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Prices and price changes
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Minimum purchase requirements
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Forecast/order process/lead time
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Notice of Defects
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Delivery terms and transfer of risk
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Distributor resells the goods in its
own name and its own account
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Sales activities on a specific group
of customers in the territory
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Sales promotion and activities of the
distributor
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Support of sales promotion by the
supplier
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Reporting of sales activities and
achievements
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Resale price recommendation (if
allowed under the Law on Cartel)
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Selling restriction for the supplier
in the territory
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Minimum stock requirements
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Storage and handling
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Use of the trademark
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Support of the distributor in case of
a violation of the trademark or other intellectual property rights of the
supplier
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Customer service and product
warranties
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Non-compete obligation
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Confidentiality
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Duration of the agreement
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Termination
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Purchase of distributor’s customer
lists
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Resale of goods on stock by the
supplier after termination
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Compensation for goodwill created by
the distributor
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Applicable law and place of
jurisdiction
Although it is generally recognized that exclusive and
non-exclusive distribution agreements play an important role for the functioning
of the economy, certain restrictions to competition for vertical agreements
violate the Federal Law on Cartels (for detailed information, please see
KARTELLRECHT). Namely, price fixing or minimum prices for resale, restrictions
on production, quantities of supply and delivery, sales restrictions (by
customer group or territories), non-compete clauses for more than five years
during the agreement and/or one year after the termination of the agreement may
fall under these restrictions, which are not allowed under the Federal Law on
Cartels. Additionally, it must considered that European competition law may even
apply for distribution agreements only related to the Swiss domestic market and
governed by Swiss law if the distribution impacts the market in the European
Community as defined under the competition rules of the EC.
Frequently Asked Questions
Do I need to compensate the distributor for its customers in case of
termination?
Under Swiss law, the distributor does not receive a compensation for its
customers. However, it must be considered that if the distributor is located
outside of Switzerland, it could be that compulsory local law regarding the
compensation of the distributor may apply. In various European countries a
compulsory compensation of the distributor exists if a distribution agreement is
terminated.
Do I have to consider EU competition law?
In the event a distribution agreement between parties impacts the common market
in the European Community, the EU competition law is applicable, independently
if the registered places of business of the contractual parties are within or
outside of the European Community.
Is there a right to withhold performance?
Given that a distribution agreement is qualified as a successive delivery of
goods against payment, the contractual party has generally the right to withhold
performance limited to the specific performance.
Do I have
to perform if the other contractual party is insolvent?
Accordingly to Article 83 CO, the contributor may withhold performance until the
insolvent party has secured its consideration.
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http://europa.eu.int/comm/index_en.htm
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April 2006 | 
