The Selective Distribution Agreement

The commercial distribution agreement and the framework agreement have been approached very rarely in our speciality literature. However, an analysis of commercial distribution as a modern form of long-term trade between suppliers and distributors reveals that these contracts are absolutely necessary in this process, where the middlemen make the trade more efficient, strengthen market positions, help penetrating new markets and attract and build customer loyalty. The selective distribution system thus facilitates the producers` access to the extended market. The producers will choose those distributors that best meet objective qualitative, quantitative and non-discriminatory selection criteria. The selective distribution is most suitable for distributing branded finished products (e.g. luxury products and sophisticated devices). The main shortcoming of this system is its incapacity to cover the entire market; for this reason, the producer has to make sure that the final user/consumer can easily identify the distributors, otherwise they might miss the trade opportunity. Of the utmost importance is the validity of the selective distribution system which depends on its compatibility with the free competition principle, a benefit of economy as a whole.