Leibel v. Raynor Manufacturing Co.

571 S.W.2d 640 (Ky. Ct. App. 1978)

 

RULE:

Reasonable notification is required in order to terminate an on-going oral agreement for the sale of goods in a relationship of manufacturer-supplier and dealer-distributor or franchisee.

FACTS:

Appellant sought review of the summary judgment dismissing one count of appellant's complaint, in an action brought by appellant following the termination, by appellee, of appellant's dealer-distributorship agreement. The court vacated the judgment and remanded the case. The court held that reasonable notification was required in order to terminate an on-going oral agreement for the sale of goods in a relationship of manufacturer-supplier, dealer-distributor, or franchisee. The court also held that appellant's distributorship agreement should have been recognized as an agreement for the sale of goods and subject to provisions of U.C.C. art. 2.

 

ISSUE:

Was notification of termination of an on-going oral agreement for the sale of goods in a relationship of manufacturer-supplier, dealer-distributor, or franchisee given in this case reasonable under the circumstances?

ANSWER:

No.

CONCLUSION:

The amount of money being invested in distributorships was increasing, distributorships were often not based on formal written agreements, and without requirement for good fair play, either party to distributorship could have been damaged. Therefore, the court held that because the distributorship agreement between appellee and appellant was one for sale of goods, appellee was required to give reasonable notification of intent to terminate distributorship contract.

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