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Ask Asad Rahman Your Own Question
Asad Rahman
Asad Rahman, Lawyer
Category: Legal
Satisfied Customers: 1529
Experience:  Practicing Attorney with 10 years experience
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I have a business located in Wilmington, DE., about 30

Customer Question

I have a business located in Wilmington, DE., about 30 minutes away from Philadelphia. I am selling a product which is popular in Asian markets. I have obtained a dealership from the vendor about 3 months ago. During the interview process, I explain to the supplier about my target market which is basically the Greater Philly area. The the supplier rep did not make any issue about our target market. In fact, he explained to me jokingly that we could market and sell anywhere in the US including Colorado where his company is located. We received the products we have purchased to showcase them on our floor subsequently and the products were delivered to us about a month ago. The company rep came to the store to help us set up the products and give us some training. At the time, he explained to me that an Asian dealer located in Fort Lee, NJ, about 2 hours away from Philly, plans to expand to Philly. As a result, the supplier requires us not to advertise the products in any Asian Philly media. The dealer started selling the products about 10 months ago and doing 1/4 million dollar volume a month for the supplier according to the rep. Practically, most of my business is from Philly and giving up that market is inconceivable. Therefore, I did not sign that agreement letter and I have started advertising in the Philly Asian media for the past two weeks. Now the rep is giving us a threat to terminate the dealership. When I had reviewed the dealership contact now more carefully as I just skimmed through when I signed about 3 months ago, I realized that the dealer contract is basically saying that the vendor can do anything and everything even without any reason and with no explanation the dealer including the dealership. In my opinion, however, it is preposterous for the vendor to impose such a restriction which is basically against a fair business competition law, especially, after the fact as the vendor never asked for such requirement when we applied and got the dealership. I have already spent a lot of money, time, and energy for the development of this business. What shall I do?
Submitted: 3 months ago.
Category: Legal
Expert:  Asad Rahman replied 3 months ago.

I am very sorry about your predicament. There are some bases upon which you could challenge the restriction. 1) You can argue that it is against public policy in that it limits competition 2) It is unconscionable for the dealer to have unilateral rights to modify a contract, and 3) You never agreed to the restriction. The challenge is that you would need to challenge this in court which can be costly but it may be worth it if you end up being able to tap into that lucrative market.

Customer: replied 3 months ago.
You said that it is against the public policy. Can you be more specific like which law code or article what they do would be against. It is not the dealer (which is us), but the vendor/supplier is adding new restrictions on us (dealer). Based on the dealer contract, however, it seems that the vendor can do anything to satisfy their needs. In that sense, I wonder what they are now require us to take may be allowed. Only argument is that what they require us now to follow may seem to be against the US government's law, fair competition. Challenging this in court can be expensive and time & energy consuming with no 100% certain outcome in our favor. In addition, the vendor may terminate our dealership citing other reasons or even without giving us any reasons.My additional questions are: 1) is there a government agency where I can report this issue and they can intervene immediately. 2) If we take this to the court, what is the chance we can prevail. 3) Can we ask them to cover for our legal expenses, if we win? 4) Is there an attorney who is willing to take on this case based on the contingency? Thanks,
Expert:  Asad Rahman replied 3 months ago.

Well there are federal and state antitrust laws. Public policy means public interest in that this type of behavior limits competition so not really a legal reference to cite. Let me try to answer your additional questions. 1) Yes, the Department of Justice and your state Attorney General might intervene. 2) I think there is a good chance you would prevail but more likely a settlement of some sort would be reached 3) Yes, typically you can get attorney fees covered if you win, but not if you settle. 4) I do not know the attorneys in your area but these types of cases are typically not the type you take for contingency.

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