30-second answer
Missed targets, unpaid invoices, price disruption, cross-territory sales or after-sales failures do not automatically justify immediate termination. The distinction between ordinary and material breach, cure periods and supply-suspension rights shapes the safest response.
Applied situation (illustrative)
Consider a brand–distributor distribution scenario: The brand cites missed sales targets; the distributor points to delayed supply and unresolved warranty claims. Before either side sends a termination notice, the contract’s cure procedure and the sequence of performance need to be reconstructed.
Classify the problem before calling everything “breach”
What the brand should focus on
A brand should build a breach schedule linking each issue to the clause, evidence, notice and cure period. Avoid collapsing many minor issues into a single assertion of “serious breach.”
What the distributor/agent should focus on
A distributor receiving a cure notice should separate factual accuracy, brand-caused performance issues such as shortages, and notice compliance before deciding whether to acknowledge, explain or counter-notify.
Clauses and records to check
- Performance target
- Supply commitment
- Notice and cure
- Suspension rights
- Termination trigger
Put supply failures and missed targets on one timeline before assigning responsibility for nonperformance. Compare both sides’ records before assigning blame: the brand sees channel and receivables exposure, while the partner sees stock, customers and sunk investment. A workable exit must address both.
Additional point for Brand vs Distributor – Dual Perspective
Separate legal entitlement, available evidence, commercial leverage and recoverable assets. A brand may focus on channel control and receivables while its distributor focuses on inventory, customers and unrecovered investment; both positions need support from the agreement and actual performance.
Financial exposure and response options
Reconcile missed targets against supply delays, credits and cure costs before calculating either side’s loss.
Settlement terms worth writing down
For this brand–distributor arrangement, write down how performance target, notice and cure and termination trigger will be handled. Set dates and responsibilities for payment or handover, and state what happens if an agreed step is missed.