Contract Dispute Between a Medical Device Company in Fujian and Its Distributor

Case Summary

The plaintiff, a medical device manufacturer based in Fujian, entered into an "Exclusive Agency Agreement" with the defendant, a trading company in Xiamen. The agreement authorized the defendant as the exclusive agent for selling and promoting the plaintiff's medical devices within the Xiamen region and explicitly prohibited cross-regional sales (channel violations). During its operation, the defendant sold significant volumes of products to unauthorized areas such as Quanzhou and Zhangzhou, disrupting the plaintiff's national pricing structure and triggering multiple complaints from other regional agents. The plaintiff filed a lawsuit seeking contract termination, payment of liquidated damages by the defendant, and compensation for losses to market order.

Key Dispute

1.Does the defendant's cross-regional sales behavior constitute a violation of anti-diversion clauses?

2.Does the plaintiff have the right to terminate the exclusive agency agreement?

3.Are the liquidated damages and losses claimed by the plaintiff reasonable?

Case Strategy

1.Key evidence in the exclusive agency contract, including explicit clauses on territorial restrictions and liabilities for unauthorized cross-region sales, records of the defendant's product distribution channels, complaint logs from other regional agents, and documentation of communication regarding rectification efforts between both parties.

2.Demonstrate that the defendant's cross-region sales severely disrupted the plaintiff's national market layout and pricing structure, causing loss of agents in other regions, which meets the contractual conditions for termination.

3.Regarding the reasonableness of liquidated damages, provide evidence such as the contractual calculation standard, the volume of unauthorized cross-regional sales by the defendant, the duration of such violations, and the actual losses incurred.

4.Apply to the court for investigation and collection of the defendant's sales data and logistics records to establish complete facts of unauthorized distribution.

Processing Result

The court ruled to terminate the "Exclusive Agency Contract" signed by both parties, revoked the defendant's exclusive agency qualification in the Xiamen region, and ordered the defendant to pay a penalty of 50 ten thousand yuan and compensate for market order losses of 20 ten thousand yuan, totaling 70 ten thousand yuan. The defendant shall bear all litigation costs for this case.

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