No legal definition of a distribution agreement
There is no legal definition of a distribution agreement in Austria. However, distribution agreements are well established in commercial practice and Austrian case law. According to Austrian law, distribution agreements may be best described as framework agreements that govern the business relationship between a distributor and a supplier of goods, and under which the distributor undertakes to sell goods and render services. The distributor may be integrated into the sales organization of a supplier, producer, or principal of goods in various degrees, but will always act as an independent entrepreneur or entity in its own name and on its own account.
The distinctive element of a distribution agreement is that the distributor purchases goods and products at a discounted rate from the supplier and/or the producer of goods, and sells the goods in its own name and its own account on a regular basis to its customers, adding a certain margin to cover its own costs and make a profit. The supplier may be a manufacturer or a reseller of the products. The distribution agreement may also define a respective territory and certain exclusivity.
Relevant legal provisions in Austria
Distribution agreements are not subject to any particular statutory provisions in Austria. Austrian law on distribution agreements consists of a combination of distinct rules of law that are contained in various federal acts and/or EU law. Subject to certain requirements, and depending on the nature of the contractual arrangement and the content of the distribution agreement, the following legal sources may or may not be applicable:
- Austrian Commercial Code (Unternehmensgesetzbuch, UGB);
- Austrian Civil Code (Allgemeines bürgerliches Gesetzbuch, ABGB);
- Austrian Commercial Agents Act (Handelsvertretergesetz, HVertG);
- Austrian Code of Civil Procedure (Zivilprozessordnung, ZPO);
- Austrian Court Jurisdiction Act (Jurisdiktionsnorm);
- Austrian Cartel Act 2005 (Kartellgesetz 2005, KartG 2005);
- Article 101 of the Treaty on the Functioning of the European Union (TFEU) and the Commission Regulation No 330/2010 on vertical agreements and concerted practices.
Since there are no specific regulations on distribution agreements, the provisions of the Austrian Commercial Agents Act (HVertG) may be applicable by analogy to distribution agreements, provided that the distributor is integrated into the sales organization of the supplier and/or the producer of goods. In addition, the general legal provisions on the sale of goods, as contained in the Austrian Civil Code (ABGB) and the Austrian Commercial Code (UGB), are applicable on purchase and sale transactions between the parties of the distribution agreement.
In this context, and due to the lack of particular statutory provisions to regulate distribution agreements in Austria, in order to ensure an effective and efficient contractual relationship, a distribution agreement should be comprehensive, and must be drafted accurately based the specific facts and circumstances of each individual case.