Distributor Termination Letter
(Failure to Follow Resale Price Agreement)

Summary

This Distributor Termination Letter - Failure to Follow Resale Price Agreement is a letter that a company can use to terminate a distributor that has failed to adhere to the supplier’s suggested resale prices. A company that seeks to discontinue working with a distributor should send a letter, such as this one, to document its legitimate business reason for ending the relationship and retain a copy of this letter in its records. Use this letter to terminate the distributor in cases where the company has an agreement with its distributor to follow its suggested resale prices and the distributor has violated the agreement. When the company has a pricing policy rather than an agreement, use the letter Distributor Termination Letter (Failure to Follow Suggested Resale Prices). To terminate a distributor for reasons unrelated to pricing practices, use a letter such as Distributor Termination Letter (Reasons Other Than Pricing Practices). This template includes practical guidance, drafting notes, and alternate clauses. If a company terminates a distributor, the distributor may have several different potential antitrust claims it could bring against the company. For example, if the company has a resale price maintenance policy or a minimum advertised price policy, the terminated distributor might allege that the company ended the relationship as the result of an illegal agreement with the distributor’s competitors or in violation of federal or state laws on resale price maintenance. For a detailed discussion of these types of claims, see the practice note Resale Price Restraints in Vertical Agreements. A company can use a letter such as this one to help substantiate a defense that the distributor was terminated for a legitimate business reason rather than for the anti-competitive reason alleged by the distributor.