Distribution Agreement Minimum Order Quantity

In order to avoid any difficulty in proving the damage and to avoid possible disputes related to the calculation of damages, it is customary for contractors or suppliers to take a penalty equivalent to the absence of an order for the year in question instead of damages. In the event of non-compliance with the guaranteed minimum order, the contractor or supplier would therefore be entitled to the amount of the penalty set in accordance with the contract, without the need to prove the amount of the damage. In the view of the Assembly of Civil Chambers, the fact that one party responded directly to the other party`s order by sending the product after a certain period of time without a declaration of acceptance (de facto acceptance) in the course of practice by then creates a sense of confidence, so that the situation continues as before. Accordingly, the Assembly recalls that the continuation of the business relationship by the parties for the duration of the remaining nine-year contract, despite formal notifications, is the sale of products by the defendant distributor for less than the amount it promised each year under the contract and the fact that the complainant company did not respond (or remain silent) to the defendant distributor`s formal notification. and the supply of products to the defendant company for the duration of the contract created a legitimate confidence in the defendant distributor that the section governing the sanction of the distribution contract between the parties is not applicable, even if that distribution link between the parties existed for the remaining term of the contract. As a result of this legitimate confidence, the defendant distributor continued to use products from the complainant company; However, she was unexpectedly asked by the complainant to pay the fine after the termination of the contract. Therefore, the source of the element resulting from the agreement to not apply Article 15 of the distribution contract is legitimate trust. Such fiduciary responsibility is a condition of the principle of good faith. More importantly, the fact that the complainant requires a sanction after the termination of the contract, in violation of its trust in the defendant distributor, constitutes a prohibition on conflicting conduct and that such conduct cannot be legally protected.