The relationship between suppliers and manufacturers’ representatives often dissolve throughout a dispute that can’t be resolved particularly without some assistance. That guidance is often a court, teams of lawyers, or arbitration. All three alternatives are costly in terms of cash and time. Relying upon legal alternatives will be the least desirable strategy. Can one craft a representative agreement in a way that lessens the likelihood from the involvement of courts, lawyers or arbitrators? Certainly! This article explains that by making certain there is a provision for annual renewal in the agreement, the parties may achieve termination without legal involvement.

What Is Annual Renewal?

An annual renewal clause demands the automatic termination and renewal with the agreement at the conclusion of each calendar or fiscal year. Such a clause do range from a couple of paragraphs the ones paragraphs are hardly ever intricate. A typical clause might suggest, “This agreement will automatically end, effective December 31 with the year that this agreement was originally signed. Should either party, (supplier or manufacturers’ representative) elect to not get into a new agreement, the party deciding to terminate their bond must give written notice at the very least 30 days, instead of more than two months prior to December 31.”

Termination through the middle from the contract year might be cumbersome. If one from the parties becomes dissatisfied having its partner through the middle from the year because of specific reason, that party could try to terminate the agreement “for cause.” In some cases, the opposing party accepts the challenge and responsibility for cause, (understaffing, poor performance, failure to set up customer meetings or seminars, or any one hundreds of other “causes”). In those cases, the parties abort the representative agreement during a contract year. Both parties will end up in their respective directions and life moves on.

However, suppliers and manufacturers’ agents can and do frequently disagree within the nature as well as the cause of this difficulty. If a supplier chooses to terminate the manufacturers’ agent “for cause,” and also the agent disagrees together with the supplier’s assessment and ownership from the problem, it is usually difficult or else impossible to prove cause without outside (i.e., legal), assistance. A simple solution to this problem when there is an annual renewal clause inside representative agreement is always to wait until sixty days prior for the end with the agreement. Draft and deliver a Notice of Intent to Terminate to your partner. In this case, the two supplier along with the manufacturers’ agent spend their last days as partners coping with customer issues avoiding spending energy squabbling over problems.