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The final revised VBER is planned to enter into force on 1 June 2022. Did you know that the Distribution Law Center is already counting down?


Read the DLC Countdown newsletters on the changes to be expected: HERE.


Translations are available in Czech, CroatianDanishPortuguese, RomanianSlovak, Spanish and Swedish on the pages of our national contributors.

Q&A on Distribution Agreements

Part 1: Legislative framework

Q1. Please specify the legislative framework generally applicable to the conclusion and execution of distribution agreements (a)? Please include a link to the official publication of the applicable rules (e.g., relevant link to the Official Gazette) (b) and, if available, to the English translation of the legislative framework (c).

a.  Legislative framework:

Danish law stipulates a rather broad scope for free negotiations and freedom of contract. There are, however, a legal framework for contract law and some specific rules that are relevant when working with distribution agreements. These include the following:

  • The Danish Contracts Act
  • The Danish Sale of Goods Act
  • The Danish Competition Act
  • The Danish Trade Agent Act.

The Danish Trade Agent Act is only relevant when dealing though a commercial agent. The rules are covered in detail by "Q&A - agency agreement DK".

b. Link(s) to official publication:

Danish Contracts Act is accessible via this link.

Danish Sale of Goods Act is accessible via this link.

Danish Competition Act is accessible via this link.

Danish Trade Agent Act is accessible via this link.

c. Link(s) to English translation:

The English version of the Contracts Act is accessible via this link

The English version of Competition Act is accessible via this link

The English version of the Trade Agent Act is accessible via this link

Q2. Other than for agency agreements pursuant to Directive 86/653 (EEC) on the coordination of the laws of the Member States relating to self-employed commercial agents, are there specific rules depending on the distribution format (e.g. franchising, exclusive distribution)?

No.

Q3. Other than general contract law and competition law, are there other rules which may generally restrict the parties when drafting and concluding distribution agreements (e.g., rules in relation to unfair contract terms in B2B contracts, specific requirements in the context of a prohibition of abuse of economic dependence)?

Yes.

If yes, which general rules apply (a)? Where available, please also include a link to the official publication of the applicable rules (b) and to the English translation of the regulatory framework (c).

a. General rules:

The Danish Act on Unfair Trading Practice in Agricultural and Food Supply Agreements imposes some restrictions. The act implements the EU Directive on unfair trading practices (2019/633/EU of 17 April 2019). The Act contains prohibitions against a number of specific trading practices imposed on a supplier by a buyer (turnover thresholds apply). Some forms of unfair trading practices are prohibited (black listed), while others are only lawful, if a clear and unambiguous agreement has been concluded between the parties (grey listed).

The Act also contains rules on the buyer’s maximum payment period. An agreement concerning longer payment periods will be considered an unfair trading practice contrary to the Act.

b. Link(s) to official publication:

Danish Act on Unfair Trading Practice in Agricultural and Food Supply Agreements is accessible via this link.

c. Link(s) to English translation:

Not available.

Part 2: Pre-contractual phase

Q4. Are there mandatory provisions in relation to the disclosure of pre-contractual information prior to concluding and/or executing distribution agreements?

Yes.

If yes, which mandatory provisions apply (a) and which information must be disclosed (b)? Where available, please also include a link to the official publication of the applicable rules (c) and, if available, to the English translation of the regulatory framework (d).

a. Mandatory provisions:

To be continued. 

b. Information to be disclosed:

Generally, the parties are completely free during the pre-contractual period as to how they behave. There are no special rules about the subject for distribution agreements. 

There are no mandatory rules which state that specific information must be provided by the parties to each other in the pre-contractual phase. However, a principle regarding seller's loyal duty of disclosure applies. The seller's loyal duty of disclosure is based on the general principles of Danish law regarding contract law and liability. Further, the principle can be deduced from section 30, 33 and 36 of the Danish Contracts Act. It implies that the seller has a duty to loyally inform the buyer of special circumstances which the seller knows or should have known, and which the seller must assume may be relevant to the buyer's decision to enter into the distribution agreement.

Besides this, the parties will often agree on how the parties must behave in the pre-contractual phase in a letter of intent. 

The parties can always be liable in accordance with the general rules for Danish tort law – specifically, the fundamental principles regarding liability in Danish tort law. In that case, the legal conditions for claiming damages must be met, including liability, causal connection, foreseeability and loss.

c. Link(s) to official publication:

Not available. 

d. Link(s) to English translation:

Not available.

Q5. Is there a standstill obligation linked to the requirements imposed for the pre-contractual phase?

No. 

Q6. Does the relevant regulatory framework impose sanctions if the pre-contractual obligations are not (fully) respected?

No. 

Q7. Can a party be held liable if it terminates the pre-contractual negotiations?

No. 

Q8. Are there other relevant rules and/or restrictions that apply during pre-contractual negotiations between supplier and distributor?  

No.

Part 3: Contractual phase

A. Form of distribution agreements

Q9. Must a distribution agreement be executed in writing to be valid and enforceable?

No, never. 

Q10. Are there any (other) requirements as to the form of the distribution agreement for it to be valid and enforceable?

No.

B. Content of distribution agreements

Q.11 Other than restrictions imposed by EU competition law (including Regulation (EU) 330/2010), do specific rules and/or restrictions apply in distribution agreements with respect to

  • the territory in which or the customers to whom the goods/services will be sold;
  • an exclusivity granted to the distributor;
  • (exclusive) sourcing/purchasing obligations;
  • resale prices;
  • non-compete clauses

No specific rules apply. 

Q12. Do specific rules and/or restrictions apply in distribution agreements with respect to

  • obligations of the supplier vis-à-vis the distributor, including in relation to the remuneration of the distributor;
  • obligations of the distributor vis-à-vis the supplier or vice versa;
  • a non-solicitation clause during and/or after the term of the distribution agreement;
  • minimum sales quota imposed on the distributor;
  • specific sector rules?

No specific rules apply.

C. Term and termination

Q13. Are there particular rules and/or restrictions in relation to the term (incl. renewal) of distribution agreements?

No.

Q14. Are there any specific rules and/or restrictions with respect to the termination of distribution agreements (e.g. minimum notice period, statutory right to compensation (goodwill or other))?

Yes.

If yes, what do these specific rules and/or restrictions entail (a)? Please include whether these specific rules and/or restrictions differ depending on whether the distribution agreement is of definite or indefinite duration (b) or whether the distribution agreement is terminated by one party for convenience or for breach by the other party (c).

a. What do these specific rules and/or restrictions entail:

Under Danish law, there is no legislation about this subject. However, according to the general principles of Danish contract law, termination of distribution agreement of indefinite duration must be done with a reasonable notice period considering the parties' trade history.

Generally, this time limit – the reasonable notice – for termination of distribution agreements depends on a concrete assessment of the case in question. Therefore, what constitutes a reasonable notice is not specifically prescribed as a given number of months or estimated on the basis of a specific average. Instead, the concrete assessment of the time limit may depend on factors such as i) the duration of the collaboration, ii) custom practice for term of notice, iii) consequences for the agent who is given notice to terminate, and iv) the relative strength between the parties.

b. If applicable, differences dependent on whether the distribution agreement is of definite or indefinite duration:

See, Q14a).

c. If applicable, differences dependent on whether the distribution agreement is terminated by one party for convenience or for breach by the other party:

If the distribution agreement is terminated due to a breach of contract by the other party, termination can be done without a notice, unless the agreement stipulates otherwise.

There is no obligation to put the other side on notice prior to sending the notice of termination. In practice, however, the parties will usually discuss the grounds for termination before filing the notice of termination.

Q15. Is it possible to terminate the distribution agreement based on certain grounds for termination (breach or other) included in the distribution agreement?

Yes.

If yes, is prior judicial intervention required in order for the termination of the agreement to take effect?

No.

Part 4: Post-contractual phase

Q16. Is the supplier required to repurchase the stock that is still at the distributor’s disposal when the distribution agreement ends?

No. 

Q17. Are there other post-contractual obligations that generally apply to either of the parties in the context of the termination of the distribution agreement?

No.

Part 5: Dispute resolution

Q18. Do specific rules and/or restrictions apply as regards the choice of forum and/or jurisdiction?

Yes. 

If yes, what do these specific rules and/or restrictions entail? 

Generally, the parties are free to choose the applicable law and jurisdiction.. However, for agreements that are covered by the Danish Act on unfair trading practice in agricultural and food, the Danish rules on unfair trading practice will always apply if both parties are established in Denmark. The minimum provisions set out in the EU Directive on Unfair Trading Practices (Directive 2019/633/EU) will apply in any event.

Q19. Can the parties opt for arbitration?

Yes. 

If yes, are there any rules and/or restrictions as regards the enforceability of arbitration clauses in distribution agreements?

Yes. 

If yes, what do these specific rules and/or restrictions entail?

Disputes concerning legal matters which the parties can agree on, including distribution agreements, but excluding matters related to Danish family law or some public law matters, may be settled by arbitration.

Q20. What is the statute of limitations applicable to claims regarding the performance of a distribution agreement?

The limitation period is a combination of a general limitation period and a maximum limitation period. The general limitation period is three years, which may be interrupted or suspended up to a maximum limitation period of ten years, cf. the Danish Limitation Act Art. 3. 

Part 6: Additional comments

Even though Danish law stipulates a rather broad scope for free negotiations and freedom of contract, there is an outer limit to what the parties can reasonably agree on. This is set out in the Danish Contracts Act Art. 36. An agreement may be amended or set aside, in whole or in part, if it is considered unreasonable or contrary to fair conduct to execute the agreement. The circumstances of the conclusion of the agreement, the content of the agreement and subsequent circumstances are taken into account.

Art. 36 Danish Contract Act applies in addition to other mandatory legislation. It is rarely applied and mainly when there is an imbalance between the parties, which may be the case in distribution agreements. However, the threshold for potential application in relation to business relationships is high.

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