They pull your distribution: they must buy your stock back

They are Articles 1445 to 1447 of the Civil Code of 2020: why a concession or distribution is extinguished, what rescinding an indeterminate-time one requires, and the warning that special laws may give more.

Concessionaires or distributors and grantors whose contract, governed by the Puerto Rico Civil Code, is ending or has ended.

• For the Article 1446 buy-back: that the concession be for an indeterminate time and that it be rescinded.Verified against the official source
• What is bought back: the new products and spare parts the concessionaire bought from the grantor and has in stock at the end of the notice period.Verified against the official source
• The buy-back price: the ordinary prices of sale to concessionaires in the notice period.Verified against the official source
• On rescinding an indeterminate-time concession the prior-notice requirement must be met.Verified against the official source

• The stock count at the end of the notice period: that is the date Article 1446 uses to measure what is bought back.
• The purchase invoices from the grantor: the article reaches only what the concessionaire bought from it.
• The list of ordinary prices of sale to concessionaires in force during the notice period.

1. 1

   Step 1: The five specific grounds

   Article 1445: in addition to the general grounds for resolution of contracts, the concession is extinguished by the death or incapacity of the concessionaire, expiry of the term, serious or repeated non-performance, dissolution of either party not deriving from merger or spin-off, and dissolution by merger or spin-off where this significantly decreases the concessionaire’s business volume.

2. 2

   Step 2: A ground agency has and this one does not

   In the agency chapter, the parallel article adds a sixth ground: a significant decrease in the agent’s business volume, standing alone. The concession list stops at five and does not carry it: here the decrease counts only when it comes from a merger or spin-off. The Code does not explain the difference, and this guide does not invent one.

3. 3

   Step 3: Rescinding a concession with no term: notice is due

   Article 1446, first sentence: where the concession for an indeterminate time is rescinded, the prior-notice requirement must be met. The duty to give notice is written down.

4. 4

   Step 4: But the chapter does not say how long that notice is

   No article in this chapter fixes the length of the notice. The agency chapter does fix it for its own contract — one month for each year in force, up to a maximum of six months — but that is written for agency, not for concession. This guide says so and does not carry the figure from one chapter to the other.

5. 5

   Step 5: The stock buy-back

   Second sentence of Article 1446: the grantor must acquire the new products and spare parts the concessionaire bought from it and has in stock at the end of the notice period. Three filters in one sentence: that they be new, that you bought them from it, and that you still hold them when the notice ends.

6. 6

   Step 6: And at what price

   The same article fixes it: at the ordinary prices of sale to concessionaires in the notice period. Not the price you paid back then, nor whatever the grantor cares to offer later: the ordinary price of sale to concessionaires during that period.

7. 7

   Step 7: What the buy-back does not reach

   The article speaks of new products and spare parts bought from the grantor. It says nothing about used merchandise, about what you bought elsewhere, about equipment, signage or installations, nor about stock you ran out of before the notice ended. This guide does not extend the rule beyond what is written.

8. 8

   Step 8: There is no clientele compensation here

   The agency chapter recognises a remuneration for the agent whose work keeps producing advantages for the principal after the contract ends. This chapter carries nothing equivalent for the concessionaire. What it carries is the stock buy-back, and that is a different thing.

9. 9

   Step 9: The special distribution statutes

   Article 1447: the provisions of this chapter do not impair the rights of the concessionaire or distributor under the special laws applicable to distribution contracts. The Code knows they exist and names none. We did not read them for this guide, so none is named here either: if your case is a distribution one, that is the point where advice is worth seeking.

The contract runs between grantor and concessionaire; the Code names no agency for this chapter. Claims over the buy-back or the notice are decided by the Court of First Instance. Article 1447 preserves the special statutes applicable to distribution contracts, without naming them.

• Dumping the new stock before the notice period ends: the buy-back is measured by what you hold when that period closes.
• Accepting a buy-back at the price you paid: the article says ordinary prices of sale to concessionaires in the notice period.
• Not keeping the invoices proving you bought that merchandise from the grantor.
• Assuming the buy-back covers used goods or goods bought elsewhere: the article says new products and spare parts bought from the grantor.
• Expecting equipment, signage or installations to be bought back: they are not in the article.
• Looking here for clientele compensation: the agency chapter carries it, not this one.
• Carrying over to concession the one-month-per-year notice the Code writes for agency.
• Believing a decrease in business volume alone extinguishes the concession: here it counts only if it comes from a merger or spin-off.
• Dismissing the special distribution statutes Article 1447 preserves without naming.

These are the government pages this guide is based on.

• Poder Judicial de Puerto Rico

  Poder Judicial

  bvirtualogp.pr.gov