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VIEHBÖCK BREITER SCHENK & NAU Indemnity for R E C H T S A VIEHBÖCK BREITER SCHENK & NAU Indemnity for R E C H T S A N W Ä L T E distributors Indemnity for distributors Reimbursement of investments (art 454 UGB) Gustav Breiter, Vienna International Distribution Institute - Barcelona 2009

VIEHBÖCK BREITER SCHENK & NAU Indemnity for R E C H T S A VIEHBÖCK BREITER SCHENK & NAU Indemnity for R E C H T S A N W Ä L T E distributors Indemnity (Art 24) by analogy provided that - similar to an agent, - supplier has knowledge of the customer data and - the distributor has acquired new, permanent customers

VIEHBÖCK BREITER SCHENK & NAU Indemnity for R E C H T S A VIEHBÖCK BREITER SCHENK & NAU Indemnity for R E C H T S A N W Ä L T E distributors The following criteria are relevant: - exclusivity of the distributor - competition clause - defined territory - obligation to buy a certain amount of goods - obligation to distribute also new products of the supplier - price recommendations - obligation to do promotion - reporting - sales targets

VIEHBÖCK BREITER SCHENK & NAU Indemnity for R E C H T S A VIEHBÖCK BREITER SCHENK & NAU Indemnity for R E C H T S A N W Ä L T E distributors - transmission of customer data to supplier - right to inspect the books of the distributor - obligation to keep an adequate stock - right of the supplier to give instructions - duty of the distributor to do the after-sale-service - right of the supplier to inspect the business premises - a margin which cannot be considered as a full compensation for the customers acquired by the distributor.

VIEHBÖCK BREITER SCHENK & NAU Indemnity for R E C H T S A VIEHBÖCK BREITER SCHENK & NAU Indemnity for R E C H T S A N W Ä L T E distributors The Austrian Supreme Court says: Even if some criteria are missing, indemnity might be due (3 Ob 85/02 z; 2 Ob 155/06 t).

VIEHBÖCK BREITER SCHENK & NAU Indemnity for R E C H T S A VIEHBÖCK BREITER SCHENK & NAU Indemnity for R E C H T S A N W Ä L T E distributors The amount of indemnity - depends on the performance of the distributor, - maximum amount: yearly margin.

VIEHBÖCK BREITER SCHENK & NAU Indemnity for R E C H T S A VIEHBÖCK BREITER SCHENK & NAU Indemnity for R E C H T S A N W Ä L T E distributors details of the calculation still rather unclear under Austrian Law: - In some cases calculated as it is usually done concerning agents. Only the part of the margin for “real promotion of business” can be included when calculating the lost profit. - In a second step, this result has to be compared with the maximum of the five-years-average of the margin. car distribution: five years-average of the effective margin minus 40 -50% for the reputation of the suppliers´ products, the risk of loss of customers and general distribution costs.

VIEHBÖCK BREITER SCHENK & NAU Indemnity for R E C H T S A VIEHBÖCK BREITER SCHENK & NAU Indemnity for R E C H T S A N W Ä L T E distributors Maximum amount: in any case a five-years-average of the margin of the distributor. Not the full margin but only the part comparable to an agent´s commission? No clear jurisdiction in this point

VIEHBÖCK BREITER SCHENK & NAU Indemnity for R E C H T S A VIEHBÖCK BREITER SCHENK & NAU Indemnity for R E C H T S A N W Ä L T E distributors Reimbursement of investments (art 454 UGB) - distributor is entitled to claim his non-amortized investments during the contractual period (Art 454 Commercial Code - UGB). - should protect car distributors - applicable also to agents and franchisees - in force since August 21, 2003. It is applicable to investments the distributor is obliged to after this date (Art 906 UGB).

VIEHBÖCK BREITER SCHENK & NAU Indemnity for R E C H T S A VIEHBÖCK BREITER SCHENK & NAU Indemnity for R E C H T S A N W Ä L T E distributors The legal provisions for the reimbursement of investments are: - the distributor made brand-specific investments (e. g. personal staff for a certain brand), - the investment was not already amortized otherwise it is not reasonably exploitable and - the distributor terminated because of an important reason or the supplier terminated without an important reason.

VIEHBÖCK BREITER SCHENK & NAU Indemnity for R E C H T S A VIEHBÖCK BREITER SCHENK & NAU Indemnity for R E C H T S A N W Ä L T E distributors The amount the supplier has to reimburse is the non amortized difference to a “normal”, non-brand-specific equipment: - additional costs of material assets (e. g. showroom) and special personal staff (e. g. costs for supplementary trainings). - to what extent the profit already covered these costs included interest? - supplier has to reimburse a remaining difference.

VIEHBÖCK BREITER SCHENK & NAU Indemnity for R E C H T S A VIEHBÖCK BREITER SCHENK & NAU Indemnity for R E C H T S A N W Ä L T E distributors - mandatory law - one-year-deadline - The compensation claim acc. Art 24 HVertr. G remains unaffected.

VIEHBÖCK BREITER SCHENK & NAU Indemnity for R E C H T S A VIEHBÖCK BREITER SCHENK & NAU Indemnity for R E C H T S A N W Ä L T E distributors Some practical problems arise: - “specific” investment: also in case the distributor have been obliged to do such investments also as partner of another supplier of that branch? - supplier obliged a potential distributor to make such investments in order to be accepted as a partner - general obligation to invest before August 21, 2003; specific directive of the supplier after that date - reasons excluding this claim do not correspond to the respective reasons concerning the compensation claim.

VIEHBÖCK BREITER SCHENK & NAU Indemnity for R E C H T S A VIEHBÖCK BREITER SCHENK & NAU Indemnity for R E C H T S A N W Ä L T E distributors Thank you for your attention! Wien Mödling Jasomirgottstrasse 6 Bahnhofsplatz 1/I/5 A-1010 Wien A-2340 Mödling Tel +43 1 535 24 53 Tel +43 2236 22 050 Fax +43 1 535 28 10 Fax +43 2236 49 239 www. vbsn. at [email protected] at