“We owe them five times their average annual profit on our business? You’ve got to be kidding. Their contract ran out and we did not renew it! They did a lousy job. We can’t afford this.” This is the typical reaction of a businessperson who learns about the laws protecting foreign distributors and agents only after appointing one. In this global age an incredible number of businesspeople remain ignorant of the risks and liability to which their companies are exposed when dealing with distributors and agents abroad.

Perhaps their naivete is understandable. U.S. manufacturers and suppliers use distributors and agents frequently to distribute their products in the U.S. When they decide to distribute internationally, it is logical for them to use distributors and agents as well. Many tend to assume that they have the same freedom to contract as they have in the U.S. They are both unaware of the laws of various countries which affect international transactions and horrified to discover that they have incurred substantial liability upon terminating a distributor or agent.