Large-scale distribution trade rules, Law firm Veat’s risk prevention

Law firm Veat received a request from a large-scale distributor A (hereinafter referred to as "the client") and conducted an in-depth legal review regarding the obligation to pay and the validity of the related agreement.

The obligation of a large-scale distributor to pay to a supplier is stipulated in the "Act on Fair Trade in Large-Scale Distribution" (hereinafter referred to as "the Large-Scale Distribution Act"). In particular, Article 7, Paragraph 1, Sub-item 3 of the Large-Scale Distribution Act stipulates that if a large-scale distributor sells goods entrusted by a supplier, they must pay the sales amount within 40 days from the end of the monthly sales closing date. 

However, there are cases where distributors negotiate different conditions with suppliers through contracts, deviating from this regulation. The corporate advisory team of Law firm Veat conducted a detailed legal review to determine whether such agreements are valid and free from legal issues.

The corporate advisory team of Law firm Veat provided the client with detailed information on comprehensive conditions, including the validity of the agreement, requirements for consent, and burden of proof, based on case law regarding the validity of agreements related to the Large-Scale Distribution Act.

Understanding the Large-Scale Distribution Act, items distributors should check

This law, referred to as the "Act on Fair Trade in Large-Scale Distribution," was established to protect fair trading relationships between large-scale distributors and suppliers or store tenants. This law plays an important role in promoting fair competition in the distribution market and enabling large-scale distributors and suppliers to achieve mutual benefit.

Article 7 of the Large-Scale Distribution Act clearly stipulates the deadline for paying the sales amount when a large-scale distributor receives goods from a supplier and sells them. Specifically, a large-scale distributor must pay the sales amount within 40 days from the end of the monthly sales closing date in the following cases.

1. When selling goods procured through special purchase transactions.

2. When receiving and managing the sales amount of a store tenant.

3. When selling goods entrusted by a supplier and receiving and managing the sales amount.

The Large-Scale Distribution Act includes various regulations to prevent unfair practices by large-scale distributors, and violation of these regulations may result in sanctions from the Fair Trade Commission. Therefore, distributors of a certain size must comply with the law in all trading processes, including contract negotiation, payment, returns, and promotional cost sharing.

If you are engaged in distribution business, it is very important to clearly understand the various complex regulations of the Large-Scale Distribution Act and follow the proper procedures at each transaction stage. Therefore, it is necessary to receive legal advice from a professional to prevent legal risks in advance and reduce the risk of sanctions.

Law firm Veat analyzes regulations related to large-scale distribution in detail and provides the client with the optimal legal services that match their business situation. In particular, we provide systematic legal advice for various contract reviews and legal dispute prevention, helping clients reduce legal risks.

If you need legal advice regarding large-scale distribution, please contact Law firm Veat.

Thank you.

Law firm Veat