GERMANY: Distributorship contracts according to German law.

Burghard PILTZ | GERMANY | 2021-09-16

Burghard PILTZ

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According to established German law practice, the distributor is entitled to a claim for compensation upon the termination of the distributorship contract if the legal relationship between the distributor and the principal exceeds a simple seller-buyer-concept and the distributor is integrated tightly into the distribution network of the principal and if furthermore the distributor is obliged to provide the principal with information regarding its customer base so that the principal is in a position to continue to use the distributor’s customer data for its own purposes.

In its judgement of 24 September 2020 (case number VII ZR 69/19), the BGH (Federal Supreme Court), Germany’s highest court, ruled on the question of whether a distributor can demand information from his principal on the contribution margins realised in the last contractual year (balance sheet contribution margin I = revenues minus variable costs = gross profit) in order to assert his claim for compensation. According to the court, such a claim does not exist.

Due to a decision of the ECJ in 2009 (ECLI:EU:C:2009:195), the German legislator had revised the provision on the compensation claim of the commercial agent in § 89 letter b HGB (Commercial Code). Since this provision is also used as a basis for the compensation claim of the distributor by analogy, the purchase discounts lost by the distributor as a consequence of the termination of the distribution agreement can no longer be used as a basis for the assessment of the compensation claim. Since, according to the decision of the ECJ, it is instead the increase in the goodwill of the principal brought about as a result of the business relationship that is important, the focus must now be on the entrepreneurial advantages and equity criteria created by the distributor for the benefit of the principal.

Some contend that the principal’s advantages correspond to his gross profit. However, since the principal’s gross profit is not known to the distributor, he should be entitled to information in order to be able to calculate the compensation amount. The higher regional courts confronted so far with this question have partly granted and partly denied the right to this information.

The BGH (Federal Supreme Court) now stated that ultimately the goodwill created by the distributor is decisive for the principal’s entrepreneurial advantages. However, according to the court, the goodwill is not identical with the gross profit and since it was not evident how knowledge of the gross profit could help the distributor in the calculation of the goodwill, the claim for information was rejected.

In future, distributors will have to explain precisely why the provision of information by the principal is necessary for the calculation of compensation. The approach sometimes practised in the past of exerting pressure on the principal by asserting a claim for information has thus been narrowly limited unless the distributor is aware of these problems when negotiating and drafting the distribution contract and sets forth in the distribution contract provisions that could help him to claim certain information.


Burghard Piltz, IDI Country Expert for distribution in Germany

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