Under Turkish law, the conditions for the right of agents to compensation for goodwill are similar to the provisions of the Directive. In addition, the last paragraph of art. 122 TCC provides that the applicable provisions also apply to the termination of exclusive distribution agreements and other similar continuing contractual relationships which grant an exclusive right, unless that would be contrary to the principle of equity. Should the distributor be limited to a particular location? This is called the location clause that the Supreme Court recently approved in Continental TV v. GTE Sylvania, Inc. Sylvania opted for a marketing strategy that would allow a limited number of franchises in a given area. In other words, if you got a franchise for a given site, you can only sell from that site. Sylvania would have a smaller number of outlets, but everyone would be able to do a better job in terms of marketing and service. The idea was to promote the Sylvania line in competition with zenith, RCA and others.
The plan went pretty well. After sylvania introduced this location clause, its market share increased significantly. This overview briefly highlights some of the most important questions you should ask yourself when designing or verifying a distribution agreement. This is not a complete checklist, as distribution agreements can range from a very brief mail order agreement that simply allows a company to sell your products to complex, multi-page international agreements. We also draw attention to the fact that software-related distribution agreements involve additional thinking. We have therefore included separate software distribution forms (see “Software Distribution Agreement” and Section XI). These usually have the form of a license with the right to sublicense and, in fact, they are sometimes more called distribution contracts. Can the distributor compete with the manufacturer after termination? The general principle of law is that a non-competition agreement, appropriate and indelible for a commercial purpose, is applicable.
If it is a mere “restriction of naked competition”, or if it is broad enough to be inappropriate, it will not be applicable. We are also of the view that in most distribution agreements that must last for a certain period of time, the parties must “swim with electricity.” Products change, management changes, brands change, market tastes change and, in fact, almost everything can be significantly different in the business environment in which the manufacturer and distributor operate, ten years after the contract is signed. Most distribution agreements are long, so we believe that the letter embodying these agreements should be flexible enough to deal with changing environments, without the parties having to constantly change the agreement. In accordance with the Directive, agents are allowed to claim commissions for transactions made after termination, provided that (i) the transaction is primarily due to the agent`s efforts during the period covered by the agency contract and that the transaction was concluded within a reasonable time after the termination of the contract; or (ii) the designation of the third party in respect of a transaction that would normally allow the agent to pay the commission during the term of the contract entered into by the principal or agent prior to the termination of the contract. Article 113/3 TCC also follows these conditions. The parties are free, as far as possible, to determine the principles of termination, the date of entry into force of the termination and the content of the cancellation contract. The content should be determined taking into account the details of the main contract and the intention of the parties….