The Termination of Distribution Agreement is a crucial document used when ending a commercial distribution relationship in Belgium. It must be carefully drafted to comply with Belgium's strict distributor protection laws, particularly the Law of 1961 on Unilateral Termination of Exclusive Distribution Agreements. This document is essential when either party wishes to end the distribution relationship, whether by mutual agreement or unilateral termination. It addresses mandatory notice periods, goodwill compensation, reimbursement of investments, handling of remaining inventory, and transition arrangements. Given Belgium's protective stance toward distributors, this agreement requires particular attention to compensation calculations and termination procedures to ensure legal compliance and minimize the risk of disputes.
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1. Parties: Identification of the supplier/manufacturer and distributor, including full legal names and registered addresses
2. Background: Reference to the original Distribution Agreement, its date, and brief context for the termination
3. Definitions: Key terms used in the termination agreement, including references to defined terms from the original agreement
4. Termination Date: Specific date when the Distribution Agreement will terminate, ensuring compliance with Belgian law notice requirements
5. Compensation: Details of any termination compensation, including goodwill compensation and reimbursement for investments as required under Belgian law
6. Outstanding Payments: Settlement of any outstanding invoices, commissions, or other payments between the parties
7. Transition Arrangements: Process for handling the transition period, including handling of ongoing orders and customer relationships
8. Return of Materials: Requirements for return of marketing materials, confidential information, and other supplier property
9. Confidentiality: Ongoing obligations regarding confidential information and trade secrets
10. Surviving Provisions: Identification of provisions from the original agreement that survive termination
11. Governing Law and Jurisdiction: Confirmation of Belgian law as governing law and jurisdiction for disputes
1. Inventory Handling: Include when there is remaining inventory to be dealt with, addressing buyback or sell-off periods
2. Employee Matters: Include when the distributor has dedicated employees for the supplier's products or when staff transfers are contemplated
3. Intellectual Property Rights: Include when there are specific IP rights or licenses that need to be addressed post-termination
4. Non-Compete Obligations: Include when implementing post-termination competition restrictions (subject to Belgian law limitations)
5. Customer Transfer: Include when specific arrangements are needed for transferring customer relationships
6. Tax Provisions: Include when there are specific tax implications that need to be addressed
7. Dispute Resolution: Include when parties want to specify alternative dispute resolution mechanisms
1. Schedule 1 - Compensation Calculation: Detailed breakdown of termination compensation amounts and calculations
2. Schedule 2 - Inventory List: List of current inventory and agreed handling procedures
3. Schedule 3 - Outstanding Orders: List of pending orders and their handling
4. Schedule 4 - Customer List: List of customers and agreed transition arrangements
5. Schedule 5 - Transition Timeline: Detailed timeline for implementing termination and transition activities
6. Appendix A - Original Distribution Agreement: Copy of the original distribution agreement being terminated
7. Appendix B - Required Notices: Copies of formal notices given in relation to the termination
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