Slovakia: Distribution Agreements

Distribution agreements are vertical agreements between sujbects operating on a different levels of production/distribution chain. Pursuant to Slovak law, there is no specific contract type of “Distribution Agreement” per se, therefore such agreements are usually concluded as innominate contracts with elements of purchase agreement or agreement for works. 

Framework Agreement

It is quite common for the parties to conclude a main framework agreement (in Slovak: Rámcová zmluva) as an innominate contract, which regulates the main aspects of the business cooperation, such as the quantitative standards of the authorized dealers (training of employees, furnishing of premises and equipment, customer services, terms of sale of other brands etc.), terms of delivery, determination of sales area or group of customers, terms of exchange of information. It goes without saying, that the main framework agreements are concluded in writing and are also often accompanied by a general terms and conditions incorporated into the contractual relationship by reference. Distribution relationship can be also modified by some of the clauses used in the international trade, typically INCOTERMS. 

Follow-up Agreements

As previously mentioned, framework agreements usually regulate main aspects of the business cooperation, however the individual deals themselves (i.e. provision of goods and/or services) is being is predominantly performed on basis of follow-up agreements (usually outlined by the framework agreement itself). The form of these follow-up agreements varies depending on the type of business and can range from still rather complex written purchase agreements up to simple e-mail or phone orders, followed up by acceptance of such orders. Based from our litigation experience, it is highly recommended to keep the follow-up agreements in written form, at least in the form of e-mail communication, followed up with handover protocols. 

Competition law

Apart from the obligation law, distribution agreements as typical vertical agreements are heavily regulated by competition law. Competition law in the Slovak Republic is regulated by the Treaty on the Functioning of the European Union and by the Act on Protection of Competition. Competition rules are unified by regulations and also transposed into Slovak legal system and harmonized by directives, therefore are similar to those in other member states of the European Union. 

Generally, vertical agreements, which have as their object or effect the prevention, restriction or distortion of competition between subjects, are prohibited (and thus void). Slovak legislation regulates exceptions like those regulated within European dimension of the competition law. If the Antimonopoly Office of the Slovak Republic commence infringement proceedings in relation to anti-competitive agreement, the subjects which are parties to such agreement have to prove that it meets conditions under one of the exemptions. Damage caused by infringement of competition law can also be recovered by private means of law enforcement on the basis of a special act. This act makes it easier for injured parties to recover the resulting damage.

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