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BizAttorney
BizAttorney, Attorney
Category: Legal
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Experience:  Over 12 years of business and legal experience.
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I have a small business which sells a unique product wholesale.

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I have a small business which sells a unique product wholesale. We have a customer who sells our product via a prominent internet outlet. We would like to sell on this outlet ourselves. We do not wish to devalue our product by having a price war. Can we legally restrict where our customer sells or not sell to him at all?

BizAttorney :

Good evening! I can help you out with your legal question tonight. Yes, if it is your product, then you hold the rights of distribution.

BizAttorney :

With that said, you will need to check the contract that you executed with this distributor. Do you have that handy tonight?

Customer:

We do not have any contract. I am concerned about restraint of trade laws.

BizAttorney :

Where is the distributor located?

Customer:

he is in Ohio.

Customer:

He is not a distributor, he is a customer who sells our products retail. He sells on Amazon,

BizAttorney :

No, trade restrain laws apply to employment issues and not products that you own.

BizAttorney :

So you sell your product to him, then he marks it up and sells it on Amazon?

Customer:

Yes. He is making more money on Amazon than we are.

BizAttorney :

I understand. There is nothing legally you can do to stop him from doing that. I would suggest not selling to him and making your own Amazon site.

BizAttorney :

He is free to buy product and then resell it at a higher price.

BizAttorney :

You may also approach him about being a distributor if he is doing a good job at selling it.

BizAttorney :

That could help you more.

Customer:

That is what I told him and he threatened me with restraint of trade law.

BizAttorney :

He is misguided in the law. You can not sell to him and are allowed to do so under the law.

BizAttorney :

You just can't refuse to sell to him based on race, religion etc.

Customer:

I do not think we are big enough to have distributors.

BizAttorney :

It is just a suggestion. I would model my own amazon site after his and sell it to yourself.

BizAttorney :

sell it yourself

Customer:

I have no idea of his race or religion. I just want our company to make more money. We can ship to the Amazon Fulfillment center as well as we can to him and make three time the profit on every unit.

BizAttorney :

I would recommend doing that then.

BizAttorney :

Disregard his threats. You aren't required by law to sell a product to anyone.

Customer:

I do not even need a store. Our product id patented and trademarked. It is well know by users and they search for it by name.

BizAttorney :

That is great. Did you have any other legal questions tonight?

Customer:

Thank-you! You have been very helpful! I don't have any others. This has really scared me and I could not afford to make a mistake.

BizAttorney :

You are very welcome and you were wise for checking with us. Have a great night and please leave me feedback before you go so that I can continue to help others.

Customer:

I will do so

BizAttorney :

Thank you and take care.

Customer:

You as well.

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