Introduction
Supplier Turkey and manufacturers utilize a variety of strategies to grow into new markets. Companies frequently use the procedure of appointing a business agent. On the other hand, companies may prefer alternative techniques to improve their business, such as negotiating a distribution deal with a distributor, depending on their needs.
Breaking into a new market is difficult for a supplier because the product will have no track record. As a result, selecting the correct entrepreneur is critical for the supplier. The two most important criteria for selecting a distributor are financial strength and market knowledge.
Turkish law does not define distribution contracts. Parties are free to conclude any contract under any term and subject under the Turkish Code of Obligations (TCO) unless it violates imperative provisions, morality, public order, or individual rights. Like any other contract not regulated by Turkish law, distribution contracts are considered “sui generis” contracts.
This article will look at distribution contracts in general, with a focus on Turkish law.
The Most Important Aspects of a Distribution Contract
A distributor buys a product from a supplier, marks it up, and sells it to its consumers under a distribution contract.
Unlike a commercial agent, a distributor does not act as an intermediary or on behalf of the provider. To put it another way, a distributor buys and sells the goods in their name and on their account. As a result, the distributor owes the customer a contractual obligation.
A distribution contract has two parties: the distributor and the supplier. The contract’s distinguishing elements are as follows:
- The supplier and the distributor have a long-standing connection.
- The distributor acts in its name and on its account, not on the supplier’s behalf. As a result, the distributor is not the supplier’s business agent, employee, or legal representative.
- A distributor frequently has the exclusive right to sell a product in a defined territory, such as a country, a region, or a city.
- A distributor is responsible for not only selling but also promoting and marketing the products.
Distribution Contracts: What Are They and How Do They Work?
Exclusive and non-exclusive distribution contracts are the two sorts of agreements.
A provider grants the sole right to sell the products within a specific region under an exclusive distribution contract, which is typical. As a result, the supplier is prohibited from appointing other distributors or selling the products directly to clients within the stated zone. If the product is sold outside of the territory, the distributor will be subject to penalty measures.
A non-exclusive distribution deal, on the other hand, requires the distributor to compete with other distributors and the supplier because there is no exclusive agreement.
Supplier Turkey When dealing with exclusive distribution contracts, it is critical to remember the mandatory conditions provided in the Law on Competition Protection (Law No. 4054) and the Block Exemption Communiqué on Vertical Agreements (Communiqué dated 2002/2). One of the goals of Law No. 4054 is to avoid agreements in Turkish marketplaces that limit competition. In light of this legislation, exclusive distribution contracts must not contain terms that could stifle fair and equal competition in the market.
Contract Format
Supplier Turkey Because the distribution contract is a “sui generis” contract, there are no requirements for its format. However, in the event of a dispute, it is always desirable for the parties to have a formal contract.
Term Definitions
The distribution contract lays out the terms and conditions of the supplier-distributor relationship. As previously stated, the parties to a distribution contract are free to decide on the contract’s terms.
The distributor, in simple terms, buys the products from the source and then sells them. However, because the supplier has a continuing contractual relationship with the distributor, it cannot be considered a simple sales contract. Depending on market needs and contract terms, the distributor continues to order the specified products from the supplier daily, weekly, or monthly basis. For both parties, timely acceptance of orders and fulfillment within the agreed-upon business days are critical.
Supplier Turkey The distributor and the supplier agree on the scope of the products that will be sold. The contract must explicitly specify the product’s characteristics and technical information. If the distributor is importing the product, meeting the requirements set down in local customs and other legislation will be critical.
The geographical area in which the distributor may sell the goods must be specified in the contract, as does the distributor’s trading activity territory. If the distributor sells the products outside of the defined region, penalty provisions are also included with the product.
The parties can decide how long the contract will last. A distribution contract might be for a specific amount of time or for an unlimited amount of time. They usually are done for a certain amount of time, with a one-year contract being the most common.
Distributor’s Rights and Obligations
One of the distributor’s key responsibilities is to make every effort to promote and market the items and sell and distribute them in the agreed-upon territory. As a result, the distributor should handle the product’s advertising and marketing. Within this scope, the distributor may be given a yearly target. The supplier may have the right to cancel the agreement if the distributor fails to purchase and sell the number of products specified in the annual target.
Supplier Turkey When undertaking marketing facilities, the distributor will advertise that it is an authorized distributor (exclusive or non-exclusive) of the products under the supplier’s brand. On the other hand, a distributor cannot advertise itself as a provider or make promises on the supplier’s behalf. The provider is not liable for the distributor’s actions. The contract usually specifies the extent to which the supplier’s trademark can be used.
Supplier’s Rights and Obligations
The supplier is obligated to supply the products as well as provide product information and technical support.
Supplier Turkey Training on the features of the products may be given to the distributor, as well as its employees and agents, at the distributor’s request.
Indemnity
Article 122 of the Turkish Commercial Code is the only section in Turkish law that deals with distribution contracts (TCC). It governs the goodwill indemnity for commercial agency contracts, and the fifth paragraph specifies that this rule applies to exclusive distribution arrangements unless equity prohibits it.
A commercial agent is entitled to a goodwill indemnity under Article 122 of the Turkish Commercial Code, which is based on the European Directive (art. 17 of 86/653/EEC) if the conditions outlined in the provision are met. As a result, a distributor will be entitled to a goodwill indemnity if the following needs are met:
- Because of the new clients brought in by the distributor after the distribution contract is terminated, the supplier receives significant benefits, or
- The distributor loses clients and incurs a financial loss as a result of the termination of the distribution contract, or
- In light of all the circumstances of the case, the payment of the indemnification is.
Supplier Turkey and Manufacturers in Turkey.
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