LegalGELegalGE
...

Supply & Distribution Agreements

Can I forbid my distributor from selling competitors' products?

Generally, exclusive purchasing obligations can be anti-competitive if your market share exceeds certain thresholds (usually 30%). You need legal advice to draft this correctly.

What happens if goods are damaged during transit?

Liability depends on the INCOTERMS used (e.g., under FOB, risk transfers when goods are on board the ship; under DAP, risk stays with seller until delivery). The contract must clarify this.

Is oral distribution agreement valid in Georgia?

Yes, oral contracts are valid, but proving their terms (exclusivity, payment terms) in court is extremely difficult. A written contract is highly advisable.

How to handle currency fluctuations in contracts?

You can include a currency adjustment clause that automatically updates prices if the GEL/USD exchange rate fluctuates beyond a certain percentage.

Reading Time

3 min

Published

...

Supply and Distribution Agreements represent the backbone of the trading business. In Georgia, an import-dependent country, the smooth operation of distribution networks is critically important. Whether dealing with local production or international imports, the relationship between parties requires clear legal regulation. An incorrectly drafted contract can lead to delivery delays, quality issues, payment disruptions, or violations of competition law (e.g., illegal exclusivity terms). Legal.ge allows you to connect with commercial law experts who will help you legally structure your supply chain, mitigate risks, and establish long-term, stable trading relationships.

What does the Supply & Distribution Agreements service cover?

Specialists on Legal.ge offer comprehensive legal support regarding commercial contracts:

  • Exclusive and Non-Exclusive Distribution: Defining territorial restrictions, exclusivity rights, and ensuring compliance with competition laws.
  • Pricing and Payment Terms: Mechanisms for price adjustments, payment deadlines, credit limits, and hedging against currency exchange risks.
  • Logistics and INCOTERMS: Correctly selecting and drafting delivery terms (EXW, CIP, DDP, etc.), which define the moment of risk transfer.
  • Quality and Warranties: Procedures for returning defective products (Return Policy), replacements, and quality inspections.
  • Intellectual Property: Rights of the distributor to use the supplier's trademarks and branding assets.
  • Termination and Liability: Prerequisites for contract termination, notice periods, and the fate of inventory after the relationship ends.

Common scenarios and needs

This service is relevant for the following business entities:

  • Importers and Brand Representatives: Who want exclusive representation of a foreign brand in Georgia and need a solid contract with the manufacturer.
  • Local Manufacturers: Who want to get their products into supermarket chains (retailers) and need a legal analysis of entry conditions (listing fees, marketing contributions).
  • Logistics Companies: Who manage the physical side of the supply chain and need clear demarcation of liability.
  • Online Stores: Who need Dropshipping agreements with suppliers.

Georgian Legal Framework

Commercial trading relationships are regulated by several key acts:

  • Civil Code of Georgia: General norms on sales, supply, and franchising.
  • Law of Georgia on Competition: Critically important for distribution agreements. The law prohibits anti-competitive agreements, such as Resale Price Maintenance or artificial market allocation.
  • International Conventions: If the contract is international, the Vienna Convention on Contracts for the International Sale of Goods (CISG), of which Georgia is a member, often applies.

Service Process Step-by-Step

Collaboration with specialists on Legal.ge involves:

  1. Needs Analysis: Studying the business model and identifying risks (e.g., currency risk, transportation).
  2. Heads of Terms: Establishing key commercial conditions.
  3. Drafting: Creating a detailed contract that includes INCOTERMS rules and compliance with competition legislation.
  4. Negotiation: Reconciling terms with the counterparty, especially regarding liability and penalties.
  5. Monitoring: Periodic review of the contract in accordance with market and legislative changes.

Why Legal.ge?

The distribution business is full of legal minefields — from antitrust fines to problems with returning defective goods. Legal.ge gives you access to lawyers who understand commercial logistics and international trade rules. Our specialists will help ensure your contracts are not a bureaucratic burden, but a real instrument for protecting your business.

Updated: ...

Specialists for this service

Loading...