9. April 2021
At Hallmark Solicitors, we have a wealth of experience in these areas and are proud of our ability and track record to provide our customers with a fast, efficient and courteous service. We regularly advise customers throughout the UK and are available throughout the process to chat with you and provide competent advice and mobile service. For support or to discuss one aspect of this newsletter, call us: The American company had distributed world-leading products from a German manufacturer for years without a written distribution agreement. The American distributor now had to be taken over by a large American company that wanted to see a written distribution agreement. The American distributor contacted me to negotiate a written sales contract with the German manufacturer. Unfortunately, we discovered that the U.S. distributor had no distribution rights, but only a right to sell as a licensed distributor. The German producer did not wish to conclude a binding distribution agreement and the agreement failed. The common error in the cross-border contract is the definition of jurisdiction and applicable legislation in this case in the event of a dispute. If the parties do not mention the applicability of the provision of the law, then it will be a very difficult task for the courts to determine the commitments of the parties if there are disputes related to the contract. The cross-border contract includes parts of two different countries, so the consensual method is to go with the international standard of the treaty, but if it is not explicit, then one of the courts has to do a huge job of determining the responsibility of one of the parties. The potential consideration should also indicate the damage if the substantial breach occurs in the contract.
The problem lies in the intent of the parties. If a substantial infringement occurs and the parties` intent on the preliminary contract is totally different, then it is very difficult to determine liability for the damages suffered by one of the parties. When Company A (headquartered in England) ends with Company B (headquartered in the United States of America) and there was no prior agreement on jurisdiction in the treaty. This theoretical situation could then be a major problem for the parties concerned, not least because it is both costly and uncomfortable to complain abroad.