Distributors in Israel
In exclusive distributor relations, the
distributor purchases the right to solely distribute
the manufacturer’s products in a defined
geographical area.
Distribution Legal frame
Distributors are independent contractors who buy
and sell in their own name and for their own
account, but who generally maintain a long-term
business relationship with the manufacturer and thus
become a part of the manufacturer’s distribution
system.
A distributor may represent one or more suppliers
under an exclusive distribution agreement. The
rights and duties of the distributor depend on the
distribution agreement. The distributor is generally
required to carry out advertising and other
promotional activities. He may be obliged, inter
alia, to train sales personnel in accordance with
the directives of the supplier (the foreign entity),
purchase minimum quantities and maintain sufficient
stock of products, obtain insurance, and ensure that
products are distributed according to domestic laws.
He must respect the supplier’s/manufacturer’s
intellectual property rights and may be obliged to
ensure that they are not violated by domestic
competitors.
Israel has no specific laws dealing with
“commercial agents” and distributors, unlike many
European countries which have developed specific
statutory regulations on the subject. However,
aspects such as the form of contract, rights and
duties of each of the parties, termination and
compensation procedures, frequently show
similarities to European countries.
To sum up, there is no distribution law in Israel
and the courts will refer to the particular contract
between the manufacturer and his distributor. The
courts tend to consider each case on its merits and
in practice and adjust the rights of the parties
according to the individual circumstances of the
case.
Therefore particular care should be addressed in
the early stages of the negotiations and in the
phrasing of the distribution contract. |
