As a dealer for a manufacturer, can the manufacturer dictate a specific territory where I sell the product?

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As a dealer for a manufacturer, can the manufacturer dictate a specific territory where I sell the product?

Asked on August 24, 2011 Illinois

Answers:

SJZ, Member, New York Bar / FreeAdvice Contributing Attorney

Answered 10 years ago | Contributor

Yes, a manufacturer can do this, but only if done in the contract or agreement between you (or if  the contract or agreement reserves to the manufacturer the power to set territories). Two parties coming to a commercial arragnment, such as manufactuer and dealer, can contract to essentially any terms they mutually agree to. Those terms can include territory as well as how to sell, prices, commissions, other duties (e.g. customer support; reporting), etc. The key thing is, they must be part of the contract--or, as noted, there must at least have been a reservation of authority in the contract to later determine territories. If the contract or agreement did not limit territories, then the manufacturer may not add that limition or dictate a specific terrritory during the term of that contract.


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