Distribution Agreements Canada

What laws and government authorities govern the relationship between a supplier and its distributor, representatives or other representatives? Are there any self-regulatory restrictions on the sector or other restrictions that may determine the distribution relationship? However, Canadian courts have been reluctant to recognize an autonomous duty of good faith that operates independently of explicit contractual terms. In addition, the courts have emphasized that an implied duty of good faith should not be used to modify the explicit terms of a contract, including the right to terminate a notice distribution agreement. In this context, a manufacturer who terminates a distribution contract in accordance with an explicit contractual provision authorising the termination of the contract should be protected against allegations that the contract was terminated on the basis of principles of bad faith. However, given the likely desire of the courts to protect the interests of distributors from arbitrary or authoritarian behaviour by manufacturers, it is always advisable for a manufacturer to take into account the principles of good faith when terminating a distribution contract. As with resale in general, the restriction or prohibition of e-commerce sales would not be prohibited in a distribution or agency contract, subject to the restrictions imposed by the Competition Act (Canada). The anti-competitive restrictions of the law apply to both online and stationary retailers. The same principles referred to in question 18 would therefore apply to territorial restrictions on the sale of electronic commerce. This bulletin provides an overview of the legislation in place regarding the termination of distribution contracts in Canada. The provisions of the Civil Code of Québec, which govern the termination of distribution agreements in that province, will be discussed separately. In order to avoid unintended characterisations, it should be ensured that each distributor acts as a separate entity and genuinely independent of a supplier (i.e. no common control or instruction from the supplier, greater than that typically characterised the distribution or client relationship) in order to be considered as a separate employer for the purposes of trade union certification and collective bargaining. . .

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