Hungary: Distribution agreements

Distribution agreements are governed by the Hungarian Civil Code. The regulation is dispositive, i.e., parties may deviate from these rules of the Civil Code.

According to the Civil Code, under a distribution contract, the supplier is obliged to sell to the distributor certain movable tangible property (hereinafter: the product), and the distributor is obliged to buy the product from the supplier and sell it in his own name and for his own account. 

The parties are obliged to protect the reputation of the product. The supplier is obliged to inform the distributor of any advertising of the product and is obliged to provide the distributor with the advertising necessary for the distribution of the product for a fee.

The supplier shall have the right to give instructions for the proper marketing of the product. If the supplier gives inappropriate or unprofessional instructions, the distributor must warn him. If the supplier maintains his instructions despite the warning, the distributor must comply with them; the supplier is liable for any damage resulting from compliance. The distributor must refuse to carry out the instruction if its execution would lead to a breach of the law or of a decision of a public authority or would endanger the persons or property of others.

The supplier is entitled to monitor the performance of the contract and its instructions.

The above provisions shall apply mutatis mutandis to the provision of services.

When it comes to distribution contracts, competition law aspects must be also assessed. Depending on the type of the distribution (non-selective, selective, exclusive) and market share of the parties on the relevant market(s) different rules apply with respect to contractual provisions restricting competition which are exempted from the general prohibition of the restriction of anticompetitive agreements. In this respect, the relevant Hungarian rules are based on their EU competition law equivalents.