Termination of distribution and agency agreements: what to do in the first ten days depends on which relationship is ending and who served the notice. Commercial agents carry statutory protection under Swedish law; distributors mostly do not. The first ten days set the record that later determines whether a compensation claim succeeds or fails.
Who this concerns
This applies to two different legal positions, and the difference matters more than most parties realise before the notice is served. A commercial agent, or handelsagent (an intermediary who negotiates or concludes sales on behalf of a principal without taking title to the goods), operates inside a statutory framework with mandatory minimum protection. A distributor buys stock and resells it in its own name and for its own account, and outside the express terms of the contract has comparatively little statutory backing under Swedish law as it currently stands.
The situation typically arises for a manufacturer or principal based outside Sweden that is ending, restructuring, or not renewing a Swedish agent or distributor relationship, and for the Swedish counterparty on the receiving end of that notice. Both sides face the same immediate task: work out which regime applies before doing anything that could be read as an admission, a waiver, or continued performance under the old terms. The contracts and transactions practice at Lodline sees this most often when a group is consolidating its Nordic distribution network or bringing sales in-house.
What the law says
Swedish law treats agency and distribution differently at the level of principle, and the gap between the two is where most disputes originate. Commercial agency carries mandatory protection that the parties cannot contract away, covering matters such as notice tied to the length of the relationship and compensation on termination for the value the agent built up for the principal. A contractual clause that tries to shorten or exclude that protection does not survive a challenge under Swedish law as it currently stands, regardless of what the written agreement says.
Distribution is treated as an ordinary commercial contract. In the absence of an express notice clause, a Swedish court applying general contract law principles will look at the length and nature of the relationship to decide what notice would have been reasonable, but there is no statutory floor equivalent to the one that protects agents. This is the single most common point of confusion for a principal that has run the same termination process for agents and distributors side by side and assumed the same rules applied to both.
Where the principal, the parent company, or the governing law clause sits outside Sweden, the position does not simplify, it complicates. A choice of foreign governing law in the contract does not, on its own, remove the mandatory protection available to a commercial agent operating in Sweden or across the EU: mandatory rules of this kind are generally treated as applying regardless of the law the parties selected, under Swedish law as it currently stands. A principal based abroad that terminates on the assumption its home jurisdiction's law governs the whole relationship, including the consequences of termination, is often the party that ends up conceding the point later, at higher cost than if the position had been checked on day one.
How it works in practice
The first hours: build the record, not the argument
Whoever receives or serves the notice should assume, from the outset, that the file will eventually be read by a court or an arbitrator. That means writing down what was said on any call, dating and filing every version of the contract and its amendments, and confirming in writing the effective date the other side is relying on. Nothing sent in this window should concede the applicable notice period, the reason for termination, or the amount owed. Positions taken informally in an email on day two are difficult to unwind on day ninety.
Confirm which regime actually applies
The contract's label is not decisive. A document called a "distribution agreement" that in substance has the counterparty negotiating sales for the principal's account, without taking title to stock, may be recharacterised as agency, with all the mandatory protection that follows. Conversely, an agreement with agency language that in practice operates as a buy-resell arrangement is assessed on what the parties actually did, not on what the cover page says. This classification exercise should happen before either side sends a substantive response, because it decides which set of rules governs everything that follows.
Read the termination clause literally, not generously
Most disputes in the first ten days come from one side reading the termination clause the way it wants the clause to read. Check the trigger events, the cure period if the notice is for breach, whether notice must be in a specific form or language, and whether it must be served on a specific address or person. A notice that is procedurally defective can be challenged on that basis alone, independent of whether the underlying reason for termination was justified.
Stock, materials, and access: what changes on day one
Ownership of stock, marketing materials, customer lists, and any systems access does not automatically revert on the date the notice is served; it reverts on the terms the contract sets, or, absent contract terms, on terms the parties negotiate. Cutting off system access or demanding stock back before the contractual position is confirmed can itself be treated as a repudiation of the agreement, shifting the balance of the dispute to the other side.
Non-compete and post-termination restrictions
A restriction that survives termination is only as good as its drafting. Check the duration, the geographic and product scope, and whether the restriction is tied to payment of any compensation to the restricted party, since an unpaid or disproportionate restriction is the kind of clause a Swedish court will narrow or set aside on request. This is worth doing before either side relies on the restriction in a customer conversation.
Commission and indemnity: what the agent can still claim
An agent's entitlement to commission on transactions concluded, or substantially prepared, before termination generally survives the end of the relationship, and is calculated on the terms the contract set for accruing commission, not on whatever the principal decides is administratively convenient afterwards. Separately, the agent may have a claim for compensation reflecting the value of the customer relationships it built for the principal, a claim that exists independently of any breach and is assessed on the agent's own activity and the benefit retained by the principal.
Distributor claims for goodwill and unrecovered investment
A distributor's position is weaker in law but not necessarily weak in fact. Where a distributor made investments the principal specifically required, exclusivity commitments, dedicated stock, market-entry spend, a claim framed in unjust enrichment or in the general duty of loyalty between contracting parties can succeed even without a statutory indemnity right. The strength of that claim depends heavily on what the principal asked for in writing at the time the investment was made, which is exactly the kind of record that is easy to lose if it is not gathered in the first ten days.
Customers and suppliers: who gets told, and when
A premature or inconsistent message to shared customers can itself generate a damages claim, separate from the termination dispute, if it damages the terminated party's ability to trade during the notice period. Align the external message with the confirmed legal position, not with whichever side wants to move fastest.
What to check in the first ten days
- The exact wording of the termination clause and which trigger it relies on
- Whether the relationship is agency, distribution, or a mixed arrangement in substance
- The notice period actually required, contractual or statutory, and whether it has started to run
- Ownership and location of stock, tooling, and marketing materials at the effective date
- Outstanding commission or invoices, and the basis on which each was calculated
- Any exclusivity, non-compete, or minimum purchase obligations that survive termination
- The governing law and dispute resolution clause, and whether it matches where the parties and assets actually are
- Whether any change of control or assignment provision was triggered by the events leading to termination
How much notice is required to terminate a commercial agency agreement in Sweden?
The required notice scales with how long the relationship has run and is fixed by mandatory provisions that the parties cannot shorten by agreement, only extend. A contract clause setting a shorter period than the statutory minimum does not bind the principal when the agent invokes the statutory floor. The actual period applicable to a given relationship depends on its duration and is confirmed by checking both the contract and the mandatory rule side by side, not by relying on the contract alone.
Can a distribution agreement be terminated with immediate effect for breach?
Only if the contract expressly allows termination for breach without notice, or if the breach is serious enough that continued performance is realistically impossible, which is assessed under general Swedish contract law principles rather than a fixed statutory test. Terminating with immediate effect on a weaker basis exposes the terminating party to a claim that the termination itself was wrongful, converting a clean exit into a damages dispute.
What happens to unpaid commission after an agency agreement ends?
Commission earned on transactions concluded, or substantially secured, before the effective date of termination remains payable on the terms the contract set for accrual, independent of the termination itself. Disputes usually arise over transactions that closed shortly after termination but were the direct result of the agent's earlier efforts; the answer turns on the contract's accrual wording and the agent's own record of the work done before the notice was served.
The numbers
Three figures decide how this plays out, and none of them is a fixed number that applies to every relationship. The notice period is set either by the contract or, for agents, by a statutory minimum that lengthens with the duration of the relationship; the actual figure has to be read off the contract and checked against that minimum, not assumed. The limitation period for a compensation or commission claim runs from the date the claim could first be made, which is not always the date of termination, and is governed by the general Swedish rules on time-barring rather than by anything specific to agency or distribution law. Any cure period stated in the termination clause itself is a matter of drafting, not statute, and has to be read from the document in front of you.
What can be said generally is that the cost of resolving a termination dispute tracks the volume of commercial activity in the years leading up to termination, not the length of the notice period itself: a relationship with a high transaction volume and thin documentation produces a more expensive dispute than a low-volume relationship with a clean paper trail, regardless of which side is right on the underlying law.
Where it usually goes wrong
Continuing to perform the contract as normal after sending or receiving notice, without a written reservation of rights, is the single most common mistake. Accepting orders, paying commission on the old schedule, or allowing continued use of trademarks and systems for weeks after the stated effective date can be read as a waiver of the notice, or as evidence that the parties agreed to extend the relationship on the original terms.
Assuming that a foreign governing law clause settles the question of mandatory protection is the second recurring error, particularly for principals based outside the EU that terminate on the assumption their home law governs everything. Mandatory Swedish or EU-level protection for commercial agents is not reliably displaced by a choice of law clause, and discovering that only after the notice has been sent removes the option of structuring the exit differently from the start.
Treating a distributor the same as an agent, or the reverse, produces the opposite failure: either conceding protection that does not exist in law, or denying a claim that a court would in fact recognise under general contract principles. Both errors are avoidable with the classification exercise described above, and both are expensive to reverse once a position has been stated in writing to the other side.
Waiting to see whether a dispute actually materialises before gathering the underlying record is the mistake that costs the most in practice. Emails, delivery records, and internal notes on why an investment was requested or a target was missed are far easier to produce on day five than on day ninety, when memories have moved on and systems may already have been decommissioned.
What to do next
The steps above cover what to do before any figure is put forward and before either side commits to a legal characterisation of the relationship. They do not cover what a specific notice clause actually means for a specific contract, or what a compensation or commission claim is realistically worth once the underlying figures are assembled, and that is where a documents-based assessment starts.
Where termination is followed by a dispute over money owed rather than the termination itself, the mechanics of building and testing that claim are close to the ones used in earn-out disputes after closing: both turn on reconstructing what was actually agreed and delivered against a paper trail assembled after the fact, and both are won or lost on the quality of that record rather than on the strength of the argument alone.
An assessment of a specific termination starts with the contract, the notice as sent or received, and the record built in the first ten days; contact the firm to have that starting position reviewed before a response is sent to the other side.