Legal Question in Business Law in California

Re: Export Contracts

Standard? Dream on. If there was such a thing, there wouldn't be a need for lawyers, and there wouldn't be frequent lawsuits over disputes and breaches. You need a properly drafted contract for your particular business, detailing all the rights and responsibilities of the parties. A little money spent now on advice, rather than a lot later on litigation. Feel free to contact me if serious about doing it right.

Re: Export Contracts

Trying to get a client to sign something blatantly labeled a non-circumvent contract will be tough; the first reaction of the client or prospective client will likely be, "Hmmmm, this guy wants to tie me up, maybe I'm being ripped off and I should circumvent in the first place and ignore this wannabe middleman."

On the other hand, so-called exclusive dealing contracts are recognized by the Uniform Commercial Code (see, in California for example, Commercial Code section 2306(2). Exclusive dealing provisions may be included in distribution agreements between manufacturers and wholesalers or wholesalers and retailers (for example). Often, the agreements will contain territorial restrictions or limitations on the retailer's ability to carry competing product lines. The seller (you) usually agrees to use its best efforts to meet all the buyer's requirements. This provides an element of consideration for the buyer's promise to obtain all of its needs from the seller. The buyer often also agrees to use best efforts to promote resale of the goods to ultimate consumers.

Exclusive dealing arrangements raise issues under federal and state franchise and antitrust laws, and if there is any tendency of the agreement to be anticompetitive or monopolistic, it may be illegal.

Non-circumvent or exclusive-dealing contracts should be lawyer-drafted for each situation, and ideally should be built into a more general representation or relationship contract between the parties, so that the restrictive provisions are seen as part of a broader agreement to promote and protect an on-going business relationship, and not just as a way to block the buyer's access to lower-cost sources father up the distribution chain. In other words, if you want your buyers to be loyal to you, you must provide them some incentive in return, such as your ongoing assistance with advertising, warehousing, export documentation, transportation arrangements, financing including letters of credit, insurance, and so on.

If you want loyalty, don't try to do it with a barefaced contract; give the client a package of services in return that will build loyalty.