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Alex J.
Alex J., Solicitor
Category: Law
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Experience:  Solicitors 2 years plus PQE
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I AM IN NEGOTIATION WITH AN AMERICAN COMPANY TO DISTRIBUTE

Resolved Question:

I AM IN NEGOTIATION WITH AN AMERICAN COMPANY TO DISTRIBUTE A PRODUCT IN THE UK I HAVE NEGOTIATED FOR A 5 YEAR TERM BUT, I DO NOT LIKE A CLAUSE AS I FEEL IT IS DRACONIAN THEY SAY IT IS A "BOILERPLATE" CLAUSE AND THERE LAWYER INSIST IT IS NORMAL IN USA THE CLAUSE IS "
13.2 Either party may terminate this Agreement at will at any time during the term of this Agreement, with or without cause, by giving not less than three (3) months written notice to the other party.
THERE ARE ALREADY OTHER GET OUT CLAUSES CONNECTED TO PERFORMANCE & INSOLVENCY
IS THIS CLAUSE REASONABLE IN EUROPE
Submitted: 2 years ago.
Category: Law
Expert:  Alex J. replied 2 years ago.
Hi,
Thank you for your question and welcome.
My name is ***** ***** I will assist you.
This is known as a "termination for convenience" clause. Ultimately you have to ask your self:
(i) Are you incurring any costs that will be armortised over the five year period? If so, and they terminate early, will you need to recover any costs- set up costs etc - do you want to ask for termination charges?
(ii) Can you obtain the products from any other source?
(iii) Are you the exclusive distributor? I would personally try and negotiate whereby this right to terminate is based on performance and sales performance?
The clause itself is not draconian, but if they are the only supplier of the products you have to accept there is an inequality of bargaining.
I look forward to hearing from you.
Kind regards
AJ
Customer: replied 2 years ago.

DEAR "AJ"

THANK YOU FOR YOUR COMMENTS.

THE COMPANY IN US IS THE SOLE MANUFACTURER ALSO THE INVENTOR OF THIS TECHNOLOGY & PRODUCT

THIS CLAUSE SEEMS TO BE UNREASONABLE. ANY LITIGATION WILL COST MONEY AS IT WILL BE IN USA

IT WAS MOST HELPFUL TO HAVE YOU AVAILABLE AT A FEW MINUTES NOTICE

CHRIS HERNIMAN

Expert:  Alex J. replied 2 years ago.
Hi,
Thank you.
Is the agreement subject to US or UK law?
Have you tried to negotiate either "termination charges" or an extended notice period?
Or have you tried saying that the termination for convenience cannot be exercised in the first 2 years of the contract for example?
Kind regards
AJ
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