Distribution Contracts in Dominican Republic
October 5, 2011 By Calderón & Del Carpio
The legislation of the Dominican Republic contains an estatute that protects the agent or local distributor in his relationships with the foreign licensor. In fact, the Law 173, of 1966, de Protección a los Agentes Importadores de Mercaderías contains several dispositions that shall be noted when doing bussiness in Dominican Republic, some of them are the followings:
I. The law is applicable to any form of relationship established between a concessionaire and a licensor, in which the first one promotes or manages in the Dominican Republic the importation, the distribution, the sale of products or services, the rent or any another form of traffic, the exploitation of merchandise or products of foreign origin and the services related to these negotiations, or when the same ones are made in the Dominican Republic, acting either as an agent, a representative, a commission agent, a concessionaire, or under another denomination.
II. In order to benefit from the rights that the law recognizes for him, the concessionaire is required to record the contract at the organization created for these purposes, in a term not longer than the next 60 days of the contracting date.
III. The main advantage that grants this norm to the concessionaire is that the licensor will not be able to finish the contract unilaterally, even if that prerogative has been agreed in the contract. No matter what was agreed, the licensor will not be able to terminate or resolved those relations or refuse to renew the contract at its normal expiration, except for just cause.
IV. The concept of just cause means a breach by the concessionaire of any essential obligations of the contract of concession, or any action or omission of this one that affects adversely and in a substantial form the interests of the licensor in the promotion or management of the import, the distribution, the sale, the rent, or any another form of traffic or exploitation of his commodity, products or services.
V. In case of removal or replacement of the concessionaire, if he refuses to renew the contract, by an unilateral action and without just cause, or if the licensor decides to operate freelance in Dominican territory, it must be repaired the damages and prejudices caused to the concessionaire. The entity that has associated with the licensor in the ignorance without just cause of the prerogatives recognized to the concessionaire will be retained as jointly severally liable in the sentence.
VI. To determine the amount of compensation the court will take in consideration, in general, the resulting damage and the loss of profits. In a particular way, is established that the concessionaire will have to pay in such a case the amount of the gross profits obtained by the concessionaire in the sale of the commodity or products or services during the last five years or if they will not come to five, they will have pay five times the amount of the annual average of the gross profits obtained during the last years, whichever they'll be. If the concessionaire has represented the licensor during more than five years, this one must pay him, besides, the amount obtained of multiplying the sum of years in excess of five on the tenth part of the average of gross profits that he will have obtained during the last five years of the representation.
VII. In the case that the concession involves exclusive distribution, is has to be understood that it includes both, the commodity or products of foreign origin as well as those who are made in the Dominican Republic.
VIII. The provisions of the norm belongs to the public order, in the sense that those ones cannot be rejected by the agreement between the contracting parties.
IX. As consequence of the public order nature of the norm, the contractual provision tending to remove the conflict of the Dominican jurisdiction lacks practical effectiveness, and local Courts will remain competent in case of conflict.
X. The provisions of the norm are normally applied by the Dominican Courts and, in general, an interpretation extremely attached to the legal text prevail
ABOUT THE AUTHOR: Calderón & Del Carpio
Calderón & Del Carpio is a law firm located in Santo Domingo, Dominican Republic, established in year 2001 and practicing, mainly, real estate law, fideicomiso, trust, litigation, tourism law, foreign investment and commercial debt collection.
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More information about Calderón & Del Carpio
Disclaimer: While every effort has been made to ensure the accuracy of this publication, it is not intended to provide legal advice as individual situations will differ and should be discussed with an expert and/or lawyer. For specific technical or legal advice on the information provided and related topics, please contact the author.
II. In order to benefit from the rights that the law recognizes for him, the concessionaire is required to record the contract at the organization created for these purposes, in a term not longer than the next 60 days of the contracting date.
III. The main advantage that grants this norm to the concessionaire is that the licensor will not be able to finish the contract unilaterally, even if that prerogative has been agreed in the contract. No matter what was agreed, the licensor will not be able to terminate or resolved those relations or refuse to renew the contract at its normal expiration, except for just cause.
IV. The concept of just cause means a breach by the concessionaire of any essential obligations of the contract of concession, or any action or omission of this one that affects adversely and in a substantial form the interests of the licensor in the promotion or management of the import, the distribution, the sale, the rent, or any another form of traffic or exploitation of his commodity, products or services.
V. In case of removal or replacement of the concessionaire, if he refuses to renew the contract, by an unilateral action and without just cause, or if the licensor decides to operate freelance in Dominican territory, it must be repaired the damages and prejudices caused to the concessionaire. The entity that has associated with the licensor in the ignorance without just cause of the prerogatives recognized to the concessionaire will be retained as jointly severally liable in the sentence.
VI. To determine the amount of compensation the court will take in consideration, in general, the resulting damage and the loss of profits. In a particular way, is established that the concessionaire will have to pay in such a case the amount of the gross profits obtained by the concessionaire in the sale of the commodity or products or services during the last five years or if they will not come to five, they will have pay five times the amount of the annual average of the gross profits obtained during the last years, whichever they'll be. If the concessionaire has represented the licensor during more than five years, this one must pay him, besides, the amount obtained of multiplying the sum of years in excess of five on the tenth part of the average of gross profits that he will have obtained during the last five years of the representation.
VII. In the case that the concession involves exclusive distribution, is has to be understood that it includes both, the commodity or products of foreign origin as well as those who are made in the Dominican Republic.
VIII. The provisions of the norm belongs to the public order, in the sense that those ones cannot be rejected by the agreement between the contracting parties.
IX. As consequence of the public order nature of the norm, the contractual provision tending to remove the conflict of the Dominican jurisdiction lacks practical effectiveness, and local Courts will remain competent in case of conflict.
X. The provisions of the norm are normally applied by the Dominican Courts and, in general, an interpretation extremely attached to the legal text prevail
ABOUT THE AUTHOR: Calderón & Del Carpio
Calderón & Del Carpio is a law firm located in Santo Domingo, Dominican Republic, established in year 2001 and practicing, mainly, real estate law, fideicomiso, trust, litigation, tourism law, foreign investment and commercial debt collection.
Copyright Calderón & Del Carpio
More information about Calderón & Del Carpio
View all articles published by Calderón & Del Carpio
Disclaimer: While every effort has been made to ensure the accuracy of this publication, it is not intended to provide legal advice as individual situations will differ and should be discussed with an expert and/or lawyer. For specific technical or legal advice on the information provided and related topics, please contact the author.
