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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 have recieved a letter from a UK based company who claims

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I have recieved a letter from a UK based company who claims to have an exclusive dealership contract for the brand in question signed with manufacturer of that brand from other UE country. they ask to cease any sales of those products and threaten with legal actions for loss of the business. I import that product from a wholesaler directly in the country of manufacurer. Import is made through an online website of the wholesaler,so is a passive sale . i resell also online. can they take a legal actions and make me payable for loss? isnt it a breach of UE anti competitive agreements? I have been seling that brand for a while now, i believe even before they become an exclusive distributor.
Submitted: 1 year ago.
Category: Law
Expert:  Alex J. replied 1 year ago.
Hi,
Thank you for your question and welcome.
My name is ***** ***** I will assist you.
Just because they have an exclusive distribution agreement with the manufacturer they cannot stop you from selling. The exclusivity does not bind you it binds the manufacturer - really this is not your problem , it is an issue for the manufacturer and distributor - the distributor should be asking the manufacturer to explain why you are being allowed to purchase and sell the goods in breach of their exclusivity. As long as you are purchasing the goods from a legitimate source then you have nothing to be concerned about.
What I would do is get a solicitor to write a letter in response to say that this is not your issue, they should take it up with manufacturer directly and you reserve the right to defend yourself against any claim the costs of doing so. The letter should also say you deny any liability. I would note this letter must come from a solicitor to give it added gravitas that you have been advised and know your rights - if the response comes from you directly they will think they can bully you, which is what this looks like at the moment.
You are right exclusive distribution agreements can be anti competitive. There are exemptions that permit them in limited circumstance, for example if the market share of the item concerned is not enormous or it is being done to protect brand good will. The competition law point is not so much the issue here, I cannot tell you for certain whether this agreement would be banned with seeing the agreement and knowing the product, but as a last resort you could report them to Competition and Markets Authority https://www.gov.uk/cma-cases.
If you did continue to sell without the manufacturers permission does this cause you any other problems - for example could you lose the benefit of any warranty?
I look forward to hearing from you.
Kind regards
AJ
Customer: replied 1 year ago.

Thank you very much for reply. unfortunately this is not a private conversation I been told so cant share too much details.

product in question is an car detailing line.

it doesnt require any warranty obviously. and i assume there are no additional issues as i have been seling it for a while. it is quite well known brand in there , but new in here. there are only few sellers of that product in UK.

. I make a purchase from a wholesaler in country of manufacturer. as far im concerned its a passive sale, as I looked for them , they didnt advertise in UK etc. so it should not couse any troubles to my suplier either.I hope.

the only think i was worried is if they (UK distributor)can in fact sue me for loss of business and costs as this is a main purpose of notice myself and other selers i know off been served I believe. I rather avoid that obviously

Customer: replied 1 year ago.

i have read somewhere that i should reply with letter of defence. is that the case?

Expert:  Alex J. replied 1 year ago.
Hi,
Thank you.
Firstly - yes you do have to respond to the letter - you cannot just ignore it - unless they have issued you with a complete set of proceedings (i.e a court issued claim form) you do not need to reply with a full defence at this stage. You can simply deny liability and reserve the right to defend yourself. Again this should be done through a solicitor otherwise they will just try and put pressure on you.
Secondly - in order to claim loss of profit they would need to prove are infringing their rights. It is not actually clear what these are - they have an exclusive distribution. Have they even said to you a) what loss they have suffered b) what you are even infringing?
Kind regards
AJ
Customer: replied 1 year ago.

At this point its only a letter I got.

The later states that they have invested a considerable amount of money and can no longer let me to break the contract they have with manufacturer. therefore ask me to cease sale and import of goods by certain date

Which is bit confusing to me as I always thought that contract can only be broke by one of the parts which signed it. in this case them and manufacturer, not me.

they did not specify the actual loss or exact infrigiment apart of that.

i have not seen their contact with manufacture , the only think i know for sure is that they have an exclusive delership for UK

Expert:  Alex J. replied 1 year ago.
Hi,
Thank you.
This is exactly the point, there is no privity of contract between you and this company, that is why it is the manufacturers responsibility to either stop selling to you or ignore the exclusivity. They cannot enforce a contract against you to which you are not a party - it would be different if they trying to enforce another right for example a trade mark infringement or passing off of good will.
This is really something they have take up with the manufacturer directly.
Their claim seems slightly frivolous, as have they even show you a copy of the contract to prove their exclusivity? Without any evidence they could just be chancing it and sending you this letter to destroy the competition.
Kind regards
AJ
Customer: replied 1 year ago.

Just wanted to say thank you! You are brilliant. will leave feedback as soon as we are done.

No, I have not seen the letter. But a while ago when I first started to sell the product I thought that the fair way would be to find UK distributor .

I have contacted manufacturer myself and got from them contact to this suplier. However at that point they only were starting up and didnt hold any stock,so even if I wanted I couldnot buy from them then. Hence I just continued to import it myself. Therefore I know they in fact are an exclusive supplier.

Manufacturer can not stop me from buying as I buy from wholesaler, not manufacturer and obviously im not gonna inform anyone which one it is...

Does that mean apart from letter of reply I shall send I have nothing to worry?

I believe they have no right to request anything from wholesaler who suplies me as far I know ( read few of UE laws) they are free to sell to me as long as its a passive sale , which it is as they do not advertise here, it was me who found and contacted them. It is important to me also that my supplier would not be a victim here either.

Expert:  Alex J. replied 1 year ago.
Hi,
Thank you.
The only caveat I have is that you have to comfort yourself that your supplier is a legitimate source, as long as you are allowed to buy from them then you can sell in this country.
The so called exclusive distributor will struggle to make a passing off claim against you because you were trading the product before they had any good will in their business.
I would just say that in your response to the exclusive distributor you make clear that you are purchasing your items from a legal wholesaler.
I acknowledge what you are saying about the passive sale point, the wholesaler would probably be acting unlawfully if they started actively advertising the goods in the UK - especially if they knew there was an exclusive distributor appointed here.
I look forward to hearing from you.
Kind regards
AJ
Customer: replied 1 year ago.

Wholesaler is rather a large one and I kow they buy directly from manufacturer,as they buy large quantieties , so I assume legit.

However I will certainly ask them just to be on safe side.

I certainly made a firts sale of the product before Exclusive dealership ocured. It was over a year ago and dealer at begin of this year didn have the price list of products yet, so I assume were only starting.

thank you very much for your help.

Is there a way I can somehow add you to my favourite list or tag so I can make sure to seek advice from you personally in future?

Expert:  Alex J. replied 1 year ago.
Hi,
Thank you.
No problem - I am happy to deal with any follow up points you have on this thread over the coming days.
Otherwise you can request me and the question will be reserved for me to answer.
In any event it sounds like the wholesaler is entitled to sell to however they wish - if the wholesaler is a bigger customer than the exclusive distributor, it seems unlikely the manufacturer would start telling who they can and cannot sell to.
I look forward to hearing from you.
Kind regards
AJ
Alex J., Solicitor
Category: Law
Satisfied Customers: 3611
Experience: Solicitors 2 years plus PQE
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