As an alternative to the more formal agency agreement, distribution agreements are primarily regulated by commercial case law in Ireland. Whilst no legislative basis exists governing distribution agreements, the general principles of contract law regulate the relationship between a supplier and a distributor. For example, the law will presume the agreement has been agreed freely and will therefore hesitate to imply terms into the agreement and instead will look to the provisions of the agreement in order to determine any issues.
In this regard, certain duties are considered fundamental in regulating the relationship:
- the distributor has a duty to act in good faith, perform the conditions of the agreement and pay the supplier for the goods.
- the supplier has a duty to act in the best interests of the distributor, supply the goods in accordance with the agreement and assist the distributor in the promotion of sales.
In addition, as distribution agreements are “Vertical Agreements”, they are subject to competition rules and fall under the remit of the Competition Act 2002 and the provisions of Article 101 on the Treaty of the Functioning of the European Union. The current 'Declaration' system on vertical agreements, which mirrors the EU rules, remains in force in Ireland until 1 December 2020.