Legal Question in Business Law in Massachusetts

Termination of Contract
In 2005 I signed a ''Distribution Agreement'' where I am able to perform a business using the parent companies name, logo and vendors. I paid $110K for the business plus $110K for a truck that is needed. In return I pay a 10% surcharge on all purchases I make for resale. In the agreement it states that the Parent company will do certain things such as developing a website with catalog and market basket for website sales. The terms of the agreement state that the Authorized Distributorship agreement ''shall be in full force and effect, assuming all of its terms and conditions are met, for a period of 10 years from the date of it's execution.'' I was informed on 12/15/07 that ''Our Authorized Distributor agreement'' will expire on 12/31/07 since he is disolving the corporation. I paid for an agreement lasting at least 10 years and the Owner cancelled it after less than 3 years. Do I have a case to be reimbursed for the cost of the business ( or at least a portion)?

Thank you in advance for your help

Asked on 12/27/07, 5:29 pm

3 Answers from Attorneys

Craig J. Tiedemann Kajko, Weisman & Colasanti, LLP

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Re: Termination of Contract

The situation you describe definately deserves further exploration. It is impossible to say definitively whether or not you have a meritorious case, however, without looking at the applicable documents and obtaining additional information from you, even though you did provide a good and detailed description.

Obvious questions that come to mind from your account are: which "terms and conditions" might the parent claim were not met, justifying its early termination? Is there language authorizing early termination if the parent decides continuing the arrangement is no longer financially advantageous, or other similar justifications?

Then there are questions as to whether the parent might argue that its sales expectations were not being met, purportedly justifying its early termination. And, a defense of financial impossibility to continue honoring the agreement and/or by going out of business, should be anticipated.

Finally, if the company is dissolving, what assets, if any, will be available to satisfy a judgment in your favor, even if you brought a case and won?

In short, much more needs to be discussed. In broad view, however, you describe a potentially good case.

Feel free to contact me for a free consultation.

Answered on 12/27/07, 7:36 pm

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Re: Termination of Contract

Without reading the terms of the agreement, it is impossible to say. However, it is likely you do have grounds for a refund of some if not all of your investment.

Please feel free to contact me without obligation to discuss your case.

Answered on 12/28/07, 11:43 am

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