Food Industry News

Suppliers will go in English

Retailers and suppliers will be able to terminate the contract unilaterally in case of loss of a significant proportion of income after the adoption of amendments to the law "On Trade". This transitional provision will operate in the first three months of the year 2017.

Food producers are worried that the network will require a discount for maintaining a place on the shelf.

The draft amendments to the Law on Trade, prepared for the second reading in the State Duma, was supplemented by the rule giving the right to retailers and their contractors to terminate supply contracts unilaterally. The document stipulates that the market participants will be able to use this option from the 1 of January (the date of entry into force of the main part of the amendments) for 1 April 2017, if after 1 April one of the companies will be largely deprived of what it could expect at the moment Conclusion of the contract. To terminate the contract, it will be necessary to send a notice to the partner two weeks before the termination of work. Criteria for determining the significance of the losses of one or another party to the contract are not specified in the text of the amendment. Amendments should be considered by the State Duma in the second reading in June.

According to the amendments to the law, Kommersant writes, retail and suppliers should bring their contracts in compliance with the new requirements by April 1. After this date, the terms of the contract, contrary to the new version of the law “On Trade” in terms of the changed payment deadlines, the inclusion in the supply contract of services for promotion, collection and entry fees on the shelf, changes in the range, as well as a ban on the creation of discriminatory conditions, will be considered insignificant. Now, in accordance with the Civil Code, a deal that violates the requirements of a law or other legal act is contestable, that is, the court must recognize it as insignificant, said senior lawyer of the A2 law firm Maria Ponoremore. In turn, the change and termination of the contract are possible by agreement of the parties. The expert summarizes that the norm proposed in the draft law establishes a special procedure for unilateral termination of the contract, which is of priority importance.

The introduction of this provision will allow retailers to avoid meeting the new requirements of the law "On Trade", I am sure the member of the Presidium of the "Support of Russia" Alexei Nebolsin. Dmitry Vostrikov, Development Director of Rusprodsoyuz, agrees with him. "The rule on termination of the contract unilaterally due to a discrepancy in expectations may allow unscrupulous market participants to circumvent the statutory requirements, forcing food service providers to sign contracts on conditions that are not favorable for themselves," he said. The volume of bonuses (the bill with amendments reduces them from the current 10% to 5%) is not included in the list of norms, according to which contracts will be considered insignificant, emphasizes Mr. Nebolsin. Therefore, he argues, even after the amendments come into force, retailers will be able to collect premiums from counterparties whose aggregate volume exceeds 5%.

If the conditions for doing business change, then the business entity should be able to restructure its work, explains Ilya Lomakin-Rumyantsev, chairman of the presidium of the Association of Retailers. "The court order of termination of the contract in this case is not justified, because the partner under the contract is not to blame for the fact that the law has changed," he said. Director of the Union of Independent Networks Sergei Kuznetsov said that the proposed rule is aimed at making the business calmly and smoothly pass to the new rules of the work, which may entail the revision of a large number of contracts. According to Mikhail Fedulov, the financial director of the "I am loved" network, in many cases, the parties try to resolve issues within the framework of existing agreements or by concluding additional agreements, which is easier and more profitable for both parties.

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