Legal Updates

Exclusive distributorship does not grant the distributor a proprietary right to distribute

July 4, 2019

An exclusive distributor received a notice of termination from the manufacturer, after 34 years of distributing and marketing the manufacturer’s products. The distributor demanded that the agreement continue or to be reimbursed for substantial damage caused as a result of the termination.
The Court rejected the claim and held that the distributor does not have any proprietary right to distribute the manufacturer's products, even where it is an exclusive distributor and even if it is a distributor who distributed the products for a very long time. Insofar as the agreement between the parties stipulates a time limit, the agreement expires at the end of the period stipulated in its and in the case where the agreement does not stipulate a period of time, the agreement may be terminated at any time by giving a due notice. The fact that the distributor invested large sums in market development for distribution of the products does not give it proprietary right in the distribution, and the payment received throughout the distribution period includes the sums invested in market development.