Termination of contracts
Wine trade relationships come to an end for all sorts of reasons. A frequent complaint is an importer’s poor performance, often combined with a breakdown of trust and/or a pattern of late payment. Or an importer may have built distribution up to a certain level, but is unable to take it to the next level. We have many years’ experience of working with wine producers who have become dissatisfied with their UK agents, distributors, or other partners, and would like to extricate themselves from the relationship with the minimum of pain and expense.
- We can handle all aspects of the termination of any UK wine agency, distribution, joint venture or other contract for you.
- At the same time we can help you set up and transfer to new distribution arrangements (and, in particular, ensure that problems with previous contracts are avoided in the new ones).
Compensation claims and dispute resolution
The termination of a wine trade contract can prove very costly for a producer if it isn’t handled with care. Too often, producers go ahead and terminate without first taking legal advice. They are then dismayed to discover:
- that the importer may have a claim for substantial compensation on termination, and
- may be entitled to withhold money he owes for wine supplied, or customer payments collected on his behalf.
The key to minimising the potential liabilities is careful planning. We have helped many wine producers to plan and handle terminations, any resultant compensation claims, in particular for compensation under the Commercial Agents Regulations. With our specialised wine trade knowledge and experience, we can offer clients the best prospect of a successful outcome in these situations.
We can also help producers who have other problems or disputes they need to resolve. For example, disputes over ownership of brands or trade marks, or how to enforce retention of title (ROT) when a customer becomes insolvent while still holding stocks of wine it hasn’t paid for – as in the recent collapses of First Quench and Oddbins (see below).
Examples of recent work
- Compensation for commercial agents – We represented the Winemakers’ Federation of Australia in its successful intervention in the landmark House of Lords case Lonsdale v Howard & Hallam Limited, which at last clarified the vexed question of how compensation for commercial agents should be assessed.
- Termination of agency agreements – We advised a producer (P) who was unhappy with its existing agent (A) and wanted to set up its own UK distribution operation, to be up-and-running from the moment A received notice of termination. If A had advance notice, he might succeed in persuading customers to take substitute wines and P could lose a lot of business. We helped P to plan and execute both the termination and the simultaneous start-up. The compensation claim A threatened fizzled out to nothing. P successfully retained virtually all the customers.
- Termination of distribution with retention of bottling contract – We advised a producer on the termination of its contract with a UK bottler who also acted as its agent/distributor, but had not combined the roles very successfully. The negotiated outcome was that the bottling contract stayed where it was, but the agency/distribution was placed elsewhere.
- Enforcement of Retention of Title (ROT) – When First Quench went into administration in late 2009, and again when Oddbins followed suit in 2011, many suppliers were left with unpaid invoices, no credit insurance, and little prospect of payment. Without a retention of title (ROT) clause, that was that. If they had ROT, the administrators challenged it if they could. Even if the administrators admitted an ROT claim, in the case of First Quench there was a further hurdle to get over – the warehouse holding the remaining stock refused to release it until somebody paid what FQ owed. We helped a number of suppliers to make successful recoveries in both these cases – read full case study.
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