ARGENTINA: The distribution agreement in the new Argentine law 26994 (commonly named as CCU), that will come into force on August 1, 2015.

Osvaldo Jorge MARZORATI | ARGENTINA | 2015-04-20

Osvaldo Jorge MARZORATI

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However, the law does not qualify what is pertinent and what is impertinent. It should have stated as they are compatible but it failed to do so.

A simple construction of the provisions however implies a strong difference with the current innominated agreement of distribution as regulated by case law, such as:

1)     Under current practice it was for the parties to establish freely the term of the distribution agreement. The new law establishes for the concewsin agreement a minimum term of four years and any term less than four years or an undetermined term shall be considered as four years.

2)     The current practice is that distribution is only for products nor for services. Concession agreements are for sales of products and services, maintenance and supply of spares. Therefore if applied to distribution agreements the standard distributor should take care of maintenance and servicing the product ( as in the car concession agreements), but the argentine distributor typically hands over to customer the warranty of manufacturer and an address provided by the manufacturer to put claims of make repairs .the official service of a product is supplied by manufacturer.

3)     The concessionaire is normally exclusive in Argentina and the distributor is not exclusive but the parties may agree now on excluding exclusivity.

4)     The indemnity of a concessionaire attempted to cover its damages,. but the indemnity of a distributor was based and predicated on the fact that he should receive a notice that permit him to substitute his business to other line of products irrespective of damages. A 20 years distributor was entitled to receive at least under current practice to 15 months maximum 18 months indemnity  to reconvert his business or continue during 15 months his right of buying and reselling for profit the product. That option was in the hand of the supplier or manufacturer. The new law provides for the concessionaire the right to be given a notice equal to one month of profits for each year the concession agreement was into effect with no ceiling like in Spain or Germany of Belgium or Holland. The draft contained a sin months indemnity but alas was suppressed by Congress. On the other hand a concession may be established for a fixed period ( 10 years) and if not renewed and there is no obligation to do such renewal, there is no prior notice and no indemnity.

5)     Manufacturer is bound to repurchase the unused products and spares in his concessionaire ‘s possession at the price established for concessionaires. No such obligation was into effect with distributors Local usages were admitted to the contrary.

6)     Finally the fact that a contract of concession is renewed year to year makes such concession agreement of undetermined term. We understand that such provision is equally applicable to distributors.

7)     In case of  contracts terminated before its term for a valid cause  the aggrieved party may also request payment of damages to the other party. ( damnus emergens and lucrum cessans) However nothing is being said of the goodwill. They may have to be litigated in the future. Agents collect goodwill and franchisees do not collect goodwill under the new law the Courts shall have to rule in the future whether customers as identifiable with goodwill are a valid claim against manufacturers in case of distribution and concession agreements.



Osvaldo Marzorati, IDI country expert for Argentina

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