With the title “distribution agreement” we refer to a framework agreement, between a supplier/principal and a reseller/distributor as independent businesses, according to which the distributor buys certain products (or services) from the principal, and resells them to customers. The principal usually grants special conditions to the distributor (territorial exclusivity, favourable price conditions, support in advertising, technical assistance etc.), and the distributor in turn engages in promoting the sales of the principal’s products (minimum purchase quantities, sales objectives, showrooms, stock, after sale services etc.).
A distribution agreement, often known in Italy as a “concession agreement” (contratto di concessione) is not, as such, regulated by Italian law. It is considered an atypical contract subject to the general rules of contract law, rules on similar contracts (vendita, somministrazione, mandato) applied by analogy, some specific legislation, and case law principles. Generally, parties are free to decide the content of the contract, and very few rules are considered mandatory.
Some of the most important general rules to consider before submitting a distribution contract to Italian law are as follows (hereinafter we refer to the Italian civil code as “c.c.”):
- some clauses of general terms and conditions (including forum selection/arbitration clause) that are burdensome for the other party (clausole vessatorie) must be accepted with an additional declaration: this results in the need, peculiar to Italian law, of a double signature of the terms (article 1341 c.c.);
- statutes of limitation (e.g. term to claim warranty, to claim damages etc.) are prescribed by law and cannot be diluted by the parties – for example, the statute of limitation to claim warranty in sales contracts in business relations (B2B) is one year from delivery (article 1495 c.c.);
- clauses limiting liability in cases of fraud, gross negligence, or violation of public policy rules are null and void (article 1229 c.c.); Termination due to the insolvency of one party is subject to mandatory regulation by law (legge fallimentare); and
- non-compete clauses must be stipulated in written form, refer to a certain activity or territory, and cannot exceed five years (article 2596 c.c.).
Other mandatory rules which should be considered are mentioned at paragraph 7. According to the case law, distribution agreements are framework agreements, according to which the parties undertake to stipulate a series of contracts for the supply of goods or services at certain conditions.
Distribution agreements, like all vertical agreements, are subject to antitrust rules. Together with the EU rules, which are directly applicable in all Member States, Italian domestic antitrust rules are contained in the Law n. 287/1990, which applies EU principles on a domestic scale.
As a general rule, Italian courts do not apply commercial agency rules to distribution agreements as they consider that the distributor, unlike an agent, is an independent business that does not qualify for particularly protective rules.