In a number of jurisdictions terminating a commercial distributor or agent may be restricted by law and require compensation of the terminated distributor or agent, or may be subject to an injunction. This can make terminating a local distributor/agent difficult even for non performance or actual malfeasance or fraud. To facilitate termination in appropriate circumstances it may be useful to insert into distribution or commercial agency agreements a clause that specifies what the parties recognise ab intio under the contract would constitute “just cause” for terminating the business relationship. Such clauses should normally set forth bright line criteria and be reviewed to ensure that the termination grounds are legally permissible under applicable local laws.

