Commercial law and distribution right
Every day, goods and services are sent all over the world and sales are constantly increasing. It goes without saying that such a development entails corresponding legal adjustments. Discover here which aspects are part of professional advice on commercial law and distribution right.
Principles of commercial law
Commercial law is an area of law that governs the legal rules and regulations for business activities and commercial relationships. The main source of commercial law is the German Commercial Code (HGB), which is divided into five books.
The HGB contains special regulations that deviate from the general provisions of the German Civil Code (BGB) and are tailored to commercial transactions. Commercial law also includes other laws and regulations, such as the Cheques Act, the Bills of Exchange Act, the Unfair Competition Act and the Restriction of Competition Act.. A special feature of commercial law is customary commercial law, which is based on customs established in commercial transactions that are recognized and applied in practice.
Basics of distribution right
Distribution right is a central component of commercial law. It regulates the complex relationships between manufacturers, distributors, retailers and consumers.
Distribution models
Distribution, i.e. the path of a product or service from the supplier to the consumer can be divided into two types.
Direct distribution
Direct distribution is a model in which manufacturers or providers sell their products or services directly to end customers without the intervention of distributors or retailers. This model offers companies greater control over the sales process. It allows them to receive direct feedback from customers. Direct sales can take various forms, for example:
- e-commerce platforms
- company websites
- telephone sales
- physical business sites
This approach can be particularly effective for companies that want to build a close customer relationship and address individual needs. However, it also comes with its own challenges. These include building an efficient sales infrastructure, as well as managing marketing and customer support tasks.
Indirect distribution
Indirect distribution is a widespread sales model in which products or services are sold to end costumers via various sales partners. Such sales partners can be:
- wholesale traders and dealers
- distributors
- agents
- franchisees
Companies use indirect distribution to expand their reach, tap into new markets and benefit from the established networks and expertise of their sales partners. This model allows companies to focus on their core competencies while the partners take over local sales and marketing activities.
Important provisions made in a distribution contract
A distribution contract regulates the scope in which the distribution right is dealt with. It determines mutual rights, obligations, remuneration and data protection of the contractual parties, as well as the duration, restrictions and extensions. The agreement answers some of the following questions:
Available contractual products
- Concrete definition of the contractual products
- Restriction or extension to new contractual products
- Acquisition of substitute products
- Changes to the contractual products or their discontinuation
Position of the sales partner
- Self-employment or dependent employment
- Commercial agents with or without district protection. District representatives are entitled to commission payments for all concluded transactions, regardless of their own involvement
- Exclusive representation, in case the entrepreneur cannot operate in the territory itself or through other sales intermediaries
Contract territory and customers
- Who is the customer?
- Customer types and industry
- Support of regular clients
- Exceptions regulation
- Provisions of cancellation for the change of territory or customer
Contractual advice on commercial and distribution law
Our experts on commerce and distribution provide comprehensive advice every step of the way. They specialize in drafting and reviewing sales contracts. In a transparent process, they draw up the contracts according to your wishes, while keeping focus on your business success. Our experts support you during the term of the contract and advise you on all legal matters. We will not leave you on your own when it comes to contract processing either and will advise you on contract processing, in particular on determining compensation claims.
Litigation and dispute resolution in distribution right
Litigation in court is only one of several ways to help clients obtain their rights. Before it comes to litigation, experts prepare the facts of the case, explain thoroughly the legal situation to clients and try to settle the dispute without time-consuming court proceedings. Should civil proceedings nevertheless be necessary, Ecovis lawyers will conduct them with determination and vigor.
Who can benefit from advice in commercial law and distribution right?
Our clients – mainly from the insurance and financial services as well as direct sales sectors – are not the only ones to benefit from professional advice in commercial and distribution law. Their distribution partners also benefit from this expertise. This includes:
- Commercial agents
- Authorized dealers
- Franchisees
- Building society and insurance representatives
- General multi-agents
- Insurance brokers, as well as
- Employed sales agents
Other services ECOVIS offers in the domain of sales and distribution law
Our integral approach is also reflected in the advice on the selection and reorganization of distribution systems. The development and optimization of sales concepts is also part of the competencies of our experts‘ teams. Additionally, the structuring of commission accounting and the use of our network are part of our services to increase the efficiency and transparency of your sales process.
