DENMARK: No compensation to a Danish distributor upon termination.

Peter GREGERSEN | DENMARK | 2011-02-16


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The judgment shows that a distributor in Denmark is rarely entitled to goodwill compensation and that special circumstances are required for a distributor to claim damages in relation to costs and investments made during the cooperation with a supplier.

The facts of the case are as follows:

In October 1996 the supplier sent a draft contract to a potential new distributor. According to the contract the distributor would become an exclusive distributor of some of the suppliers’ products in Denmark, however, subject to the distributor fulfilling requirements as to minimum purchases. The distributor never signed the contract but the parties initiated a cooperation anyway. During the term of the cooperation the distributor also sold products of other manufacturers, and no minimum purchase requirements were fixed.

From 1997 until 2004 the distributor’s purchases of the supplier’s products climbed from approximately 40,000 Euro to 380,000 Euro. During the cooperation the supplier referred customers to the distributor and referred to it as ‘our importer’, ‘our distributor’ and ‘our authorised distributor’.

In April 2004 the supplier suggested that the distributor changed its pricing strategy in Denmark in order to increase sales.

In November 2004 the supplier informed the distributor that it would employ a new sales manager for Denmark, however, only to support the distributor.

The cooperation between the suppliers’ new sales manager and the distributor did not go well.

A few times, the distributor complained that the sales manager accepted orders on behalf of the supplier on the Danish market and the distributor therefore threatened to terminate the cooperation, but the cooperation was never formally terminated but ended in the second half of 2005 at which time the distributor owed the supplier a significant amount of money.

On 12 October 2008 the distributor filed various claims before the Maritime and Commercial Court.

The court only accepted the distributor’s claim for commission to a special customer that had been agreed and also payment for warranty repairs as this had been a firm practise between the parties.

With respect to a goodwill claim and some damages claims the Maritime and Commercial Court found as follows:

In view of the fact that the contract was never signed and also not followed, the court found that the distributor had not been an exclusive distributor in spite of the fact that the supplier referred customers to the distributor etc. For this reason the distributor was not entitled to any goodwill compensation.

With respect to the claim related to the actions of the suppliers’ sales manager, the court found that the distributor had not documented that it had suffered a loss.

As for a claim for marketing costs the court found that it had been agreed as part of the pricing strategy that the supplier would cover marketing costs. However, as the extent of such marketing costs had not been agreed and as the marketing continued to represent a value to the distributor also after the parties’ cooperation had ended, the distributor was not entitled to any compensation for marketing costs.

With respect to an alleged loss in relation to stock, spare parts, catalogues etc., the court found that the distributor itself had decided the size of the stock and scope of marketing costs and efforts and as these had also continued to represent a value to the distributor after the cooperation had ended. Therefore, the court did not award the distributor any compensation regarding these claims either.




Peter Gregersen, IDI agency & distribution country expert for Denmark.



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