In a hypothetical example, a US principal replacing its Swiss distributor expects the signed termination clause to settle the exit. The agreed notice expires, the replacement takes over the territory, and the outgoing business receives payment for outstanding invoices. In pharmaceutical and medical device distribution, that account can omit compensation for customers, disputed inventory and the continued performance of safety duties. The commercial agreement may end while the authorization, representative mandate or reporting system still depends on the outgoing distributor. Those different relationships can carry different end dates.
1. When Does the Distribution Agreement Actually End?
Swiss distribution agreements are not governed by a dedicated statutory contract regime. An independent distributor buying and reselling products in its own name and for its own account differs from a commercial agent. Under Art. 418a(1) OR, an agent undertakes on a continuing basis to procure transactions for a principal, or conclude them in the principal's name and for its account, without being its employee. The difference affects which termination rules apply directly and which might apply by analogy. Calling the agreement a distribution agreement does not resolve a mixed arrangement in which some sales are resale transactions and others generate commissions.1Bundesgesetz betreffend die Ergänzung des Schweizerischen Zivilgesetzbuches (Fünfter Teil: Obligationenrecht, OR) vom 30. März 1911 (SR 220), Art. 418a, Art. 418q–418v.
The Federal Supreme Court's exclusive-distribution case law recognizes that the economic relationship can resemble agency closely enough to justify applying particular agency protections. It does not import the entire agency statute into every distribution agreement. The principal's controls and the distributor's contractual obligations matter, as does the particular question for which an analogy is proposed. A commercial relationship may support a goodwill claim without making all its payment, termination and return obligations identical to an agent's.2BGE 134 III 497, 505–508 E. 4.3–4.4.2: the exclusive distributor must occupy a position economically comparable to an agent.
For counsel familiar with US dealer-protection legislation, the closest comparison is a protected business relationship rather than a single federal distribution rule. The Wisconsin Fair Dealership Law requires good cause for termination of covered dealerships, while eligibility involves a community of interest in the business. That familiar inquiry does not supply the Swiss answer. Swiss distribution termination turns on the agreed relationship, applicable general contract law and the particular statutory analogy, rather than an assumption that every dealer enjoys the same statutory renewal protection.3Wisconsin Judicial Conference, Wisconsin Civil Jury Instructions 2769 (2020), 2770 (2022) and 2771 (2005) (Wisconsin Fair Dealership Law).
The notice provisions themselves illustrate the distinction. For an indefinite agency agreement, Art. 418q(1) OR permits termination during the first year at the end of the calendar month following notice; a shorter period requires a written agreement. After the relationship has lasted at least a year, Art. 418q(2) OR provides two months' notice to a calendar quarter-end, permitting a longer period or another end date. Art. 418q(3) OR prohibits different notice periods for the parties. These are agency rules. Whether they fill a particular distribution agreement's silence requires a separate justification.
Nor is six months a universal Swiss distributor notice period. In BGE 107 II 216, the court dealt with an invalid contractual restriction on termination and reconstructed the parties' hypothetical agreement. Its use of the six-month period in Art. 546(1) OR depended on collaboration closely resembling a partnership. The decision cannot replace the terms of an unrelated pharmaceutical distribution agreement. Fixed terms, renewal provisions and the consequences of an invalid clause may therefore change the commercial end date before any compensation question arises.4BGE 107 II 216, 218–220 E. 3–4: the six-month analogy arose from the particular partnership-like collaboration.
Immediate termination presents another question. Art. 418r OR permits either party to end an agency agreement immediately for important reasons. For continuing contracts, the Federal Supreme Court also recognizes termination where good faith no longer permits the terminating party to be expected to continue until the contractual or next ordinary end date. A serious breach may suffice; repeated lesser breaches despite warnings can also matter. The reason must be invoked promptly, but the court's distribution analysis does not establish a uniform employment-style number of days. A disputed immediate exit can generate lost-profit claims, and the principal's own breach of exclusivity may put the distributor in the position of terminating for cause.5Urteil BGer 4A_241/2017 vom 31. August 2018, E. 4–6: important reasons, prompt invocation and damages under an exclusive distribution agreement.
The end of a distributor's sales rights can coincide with the beginning of a compensation claim, while the product's regulatory responsibilities continue under a separate legal relationship.
2. When Can the Distributor Claim Goodwill Compensation?
Art. 418u(1) OR gives the commercial agent an appropriate goodwill indemnity where its activities substantially expanded the principal's clientele, the principal or its successor derives considerable benefits from business with those acquired customers after termination, and an award is not inequitable. These conditions operate cumulatively. In BGE 134 III 497, the Federal Supreme Court accepted applying that protection by analogy to an exclusive distributor whose economic position was comparable to an agent's. The claim compensates a commercial value the principal continues to receive; it is not simply damages for ending the contract.6OR (n 1), Art. 418u(1)–(3); BGE 134 III 497 (n 2), 499–500 E. 4.1.
Compliance with an ordinary notice clause does not itself answer a qualifying goodwill claim. Conversely, years spent promoting products do not establish entitlement without the required customer expansion and continuing benefit. A principal may dispute how much business the distributor actually generated, whether those customers will remain with the products, and whether the distributor's own services explain their loyalty. The existence of a recognizable brand does not eliminate that evidence problem.
In its judgment of 8 October 2019, the Federal Supreme Court upheld rejection of an exclusive distributor's claim where the asserted continuing benefit had not been established. The question whether customers followed the supplier's products or the distributor's own qualities remained a matter of proof. The court did not treat brand loyalty as a proposition that could be assumed across sectors. In pharmaceutical and device markets, a principal's continuing sales and the outgoing distributor's local relationships may point in different directions.7Urteil BGer 4A_71/2019 vom 8. Oktober 2019, E. 4.1–4.5.2: continuing benefit and customer allegiance require proof.
BGE 134 III 497 places proof of the substantial customer increase and the principal's continuing benefit on the claimant, without imposing excessively severe requirements for proof of that benefit. The principal bears the burden of showing that an award would be inequitable or should be reduced. A forecast of future orders, a claim of distributor loyalty and a demand for the maximum annual amount therefore address different parts of the case. The same sales report may not establish all of them.
Legal exclusivity is a further limit. In its judgment of 4 March 2022, the Federal Supreme Court rejected the analogy for resale business governed by a nonexclusive agreement. The fact that the supplier had used only one distributor did not create an enforceable right to exclusivity. The same dispute also involved direct deliveries presented as agency business, which raised distinct proof questions. Being the sole distributor in practice, having worked closely with the manufacturer and describing the relationship as strategically important do not collapse those different contractual positions.8Urteil BGer 4A_393/2021 vom 4. März 2022, E. 6.2–6.3: factual sole distribution did not establish a legal exclusivity right.
The statutory ceiling is also narrower than a year's revenue or gross margin. Art. 418u(2) OR caps the indemnity at one year's net earnings from the relevant relationship, calculated from the average of the last five years or the entire duration if shorter. The ceiling is not a fixed award. BGE 134 III 497 reads net earnings after the costs incurred to obtain them. A distributor with multiple product lines can consequently face disputes about the earnings attributable to the terminated relationship, alongside disputes about the value retained by the principal.
Art. 418u(3) OR excludes the claim where the relationship ended for a reason attributable to the agent. That inquiry is different from who sent the termination letter. An agreement's treatment of breach, the facts supporting termination and the cause of the breakdown can affect goodwill and damages differently. The statutory agency provisions also contain a scope qualification: Art. 418a(2) OR permits written departures for agents operating only as a side business, subject to its specified safeguards. Neither the full-time agency model nor the distributor analogy supports an unqualified statement about every intermediary.
For a qualifying exclusive distributor, the advance-waiver prohibition cannot be removed merely by labeling the parties independent contractors. BGE 134 III 497 expressly preserves that mandatory character when applying Art. 418u OR by analogy. Its status within Swiss contract law does not settle whether it overrides a foreign governing-law clause. Art. 116 of the IPRG recognizes party choice; Art. 18 IPRG reserves Swiss provisions whose particular purpose requires application regardless of the designated law. Identifying that separate basis requires more than pointing to the word mandatory.9Bundesgesetz über das Internationale Privatrecht (IPRG) vom 18. Dezember 1987 (SR 291), Art. 18 and Art. 116.
3. Who Takes the Stock and the Drug Authorization?
The goodwill claim does not settle ownership or price of inventory. Goods bought for resale remain a different commercial asset from customers who may continue buying the principal's products. The agency return rule in Art. 418v OR concerns what a party received for the duration of the contract or for the other party's account. It does not itself create a general obligation for a manufacturer to repurchase an independent distributor's paid inventory. Any asserted stock obligation therefore depends on the agreement and the legal basis advanced for the particular goods, rather than the existence of a goodwill claim.
The distribution agreement may promise a buy-back, permit a sell-off, or prohibit further sales after termination. Those arrangements produce different disputes over products bought before notice, goods delivered during the notice period and stock that cannot lawfully be resold. An invoice price says little about the value of packs approaching expiry or goods whose storage history is disputed. A replacement distributor's willingness to acquire them does not establish what the outgoing distributor can demand from the principal. Liability for the exit and the commercial treatment of stock may therefore remain contested even when the physical quantity is agreed.
An obligation to maintain stock during the relationship can intensify the commercial disagreement without determining the legal result. The principal may have expected continuity of supply while the distributor expected a chance to realize its purchase cost through later sales. If termination cuts across those expectations, an agreed quantity does not answer whether the relevant obligation is repurchase, permission to sell, or compensation for a breach. The regulatory condition of the goods can also separate their accounting value from their value to another licensed operator.
For medicines, the identity of the Swiss marketing authorization holder introduces a separate dependency. Art. 10(1)(b)–(c) HMG requires the applicant to hold the relevant manufacturing, import or wholesale authorization and to have a residence, registered office or branch in Switzerland. A US principal's ownership of the brand does not make it the Swiss authorization holder. Where the distributor holds the authorization, the appointment of a replacement sales partner does not by itself transfer that status. The broader distinction between US approval and Swiss authorization also informs the analysis of Swissmedic authorization after FDA approval.10Bundesgesetz über Arzneimittel und Medizinprodukte (Heilmittelgesetz, HMG) vom 15. Dezember 2000 (SR 812.21), Art. 10(1), Art. 28 and Art. 59.
Art. 10 VAM permits transfer of an authorization. Swissmedic's transfer guidance describes an approval application by the incoming holder supported by a legally signed assignment declaration from the outgoing holder. Its ordinary three-month lead time, with a shorter lead requiring justification, is an administrative expectation for the transfer procedure, rather than a contractual termination period. A clause ending distribution on a given day consequently cannot establish that the regulatory transfer will take effect on that day. The outgoing party's cooperation and the incoming party's qualification can have commercial value distinct from the unsold packs.11Verordnung über die Arzneimittel (Arzneimittelverordnung, VAM) vom 21. September 2018 (SR 812.212.21), Art. 10; Swissmedic, Übertragung der Zulassung (Wegleitung ZL404_00_001, version 2.1, 1 July 2025), section 5.1.
Swissmedic's guidance also distinguishes batches already released for the market from batches requiring release after the transfer. It does not treat a transfer of authorization as an automatic recall of products already circulating. Under the stated conditions, an outgoing holder with a wholesale authorization can continue distributing batches it released before transfer. A private stock-transfer agreement and the regulatory authority to release or distribute batches are therefore separate questions. A demand that every pack return to the manufacturer cannot be derived simply from the fact that the authorization holder changes.12Swissmedic (n 11), sections 5.1.3–5.1.4.1: batch release and the treatment of stock already released for the market remain distinct.
Safety information is another continuing responsibility. Art. 59 HMG provides reporting duties; Art. 61 and Art. 65 VAM govern the manufacturer's or holder's reporting and the collection of relevant information at a central reporting point. A commercial notice does not end the possibility that a complaint concerns a product sold earlier. The AMBV separately regulates the licensed import and wholesale operation, its quality system and responsible technical oversight. An exit that leaves the parties disputing access to records, batch information or safety reports can therefore affect obligations neither party can settle simply by allocating the sale proceeds.13Verordnung über die Bewilligungen im Arzneimittelbereich (Arzneimittel-Bewilligungsverordnung, AMBV) vom 14. November 2018 (SR 812.212.1), Art. 11, Art. 13 and Art. 17.
4. What Continues After the Distributor Has Been Replaced?
Medical device distribution separates the roles differently. For devices governed by the MepV, Art. 51(1) MepV requires a manufacturer without a Swiss seat to appoint a Swiss authorized representative under a written mandate. The Swiss authorized representative, commonly called the CH-REP, need not be the distributor or importer. If the outgoing distributor also holds that mandate, ending its sales rights leaves a separate representative relationship to address. The commercial label does not determine which legal capacity the business held for the affected products.14Medizinprodukteverordnung (MepV) vom 1. Juli 2020 (SR 812.213), Art. 51, Art. 53–54 and Art. 66.
Art. 51(4) MepV refers changes of representative to Art. 12 MDR (the EU Medical Device Regulation). That provision addresses the dates of the outgoing and incoming mandates, use of the outgoing representative's name, document transfer and forwarding of complaints after the mandate ends. The outgoing representative participates in the change agreement where practicable; the provision is not an unconditional requirement for three signatures in every case. If the principal and distributor are already in dispute, the rights to records and the continuing arrival of complaints may matter as much as the nominal replacement date.
Importer obligations arise separately under Art. 53 MepV, including verification and identification duties and further responsibilities before and after placing products on the market. The distributor's duties under Art. 54 MepV are not identical. Art. 66(2bis) MepV also places reporting responsibility on the required Swiss representative. For in vitro diagnostics, Art. 44, Art. 46 and Art. 59 of the IvDV provide the corresponding representative, importer and reporting provisions, with representative changes referred to Art. 12 IVDR (the EU In Vitro Diagnostic Medical Devices Regulation). A portfolio spanning those regimes does not acquire one uniform handover merely because one distribution agreement covers it.15Verordnung über In-vitro-Diagnostika (IvDV) vom 4. Mai 2022 (SR 812.219), Art. 44, Art. 46 and Art. 59.
Restrictions intended to protect the replacement network raise a further problem. Under Art. 5(4) KG, specified vertical price and territorial restrictions trigger a presumption of elimination of effective competition. The WEKO vertical agreements notice distinguishes absolute territorial protection from restrictions that may fall within defined exceptions. A sell-off arrangement that controls resale prices or blocks cross-border sales cannot be assessed solely as a private settlement of stock. The separate analysis of parallel imports under pharmaceutical distribution agreements addresses the territorial issue.16Bundesgesetz über Kartelle und andere Wettbewerbsbeschränkungen (Kartellgesetz, KG) vom 6. Oktober 1995 (SR 251), Art. 5 and Art. 7; WEKO, Bekanntmachung über die wettbewerbsrechtliche Behandlung vertikaler Abreden (VertBek, 12 December 2022), Art. 12 and Art. 15(h) VertBek.
Post-termination competition restraints are also conditional. The post-termination provision of the WEKO vertical agreements notice identifies such restraints as qualitatively serious, with an exception requiring cumulative conditions concerning competing goods or services, the premises from which the distributor operated, indispensable protection of transferred know-how and a duration of no more than one year. A one-year limit alone does not establish that the exception applies. Market conditions and justification remain relevant under the KG. Art. 7 KG separately addresses abuse by dominant or relatively powerful undertakings, including refusal of business relations. Dependence and termination can therefore raise a competition question without creating an automatic right to indefinite renewal.
The forum clause governs another relationship again. Art. 177(1) IPRG permits pecuniary claims in international arbitration, and the Federal Supreme Court has distinguished the mandatory nature of Art. 418u OR from nonarbitrability. The existence of a protective claim does not itself reserve it to a state court. Yet a commercial tribunal's decision about cooperation, payment or documents is different from Swissmedic's determination of regulatory status. The analysis of arbitration and litigation for pharmaceutical deal disputes examines the wider procedural choices. An exit dispute can require both a commercial remedy and a separate regulatory outcome.17IPRG (n 9), Art. 177(1) and Art. 187(1); BGE 144 III 235, E. 2.3.
5. Strategic Considerations for US Principals Replacing Swiss Distributors
For a US principal, the financial question is not exhausted by the remaining notice period. A goodwill claim concerns the value retained from acquired customers. Lost-profit damages concern a breach and its consequences. A stock claim concerns goods and the agreement governing them. An authorization or representative dispute concerns the ability to maintain a lawful commercial presence. Treating one settlement figure as though it resolves all four can obscure differences in claimant, evidence, legal basis and timing.
The European comparison does not remove those differences. Under Art. 1(2) Directive 86/653/EEC, the Commercial Agents Directive defines the agent by continuing authority to negotiate, or negotiate and conclude, sales or purchases for the principal. An independent distributor buying and reselling for its own account is outside that definition as such. The indemnity and compensation regime in Art. 17–19 of Directive 86/653/EEC consequently does not itself supply a general distributor exit payment. National analogies remain a separate question, and Switzerland is not an EU Member State.18Council Directive 86/653/EEC of 18 December 1986 on the coordination of the laws of the Member States relating to self-employed commercial agents [1986] OJ L382/17, Art. 1(2) and Art. 17–19.
The compensation for commercial agents under § 89b HGB provides a German reference point, but its measure and exclusions cannot simply be substituted for Art. 418u OR. The German provision's cap refers to annual commission or other annual remuneration; the Swiss provision uses net earnings from the relationship. A principal applying one European exit model to contracts governed by different laws can therefore arrive at a familiar-looking figure through the wrong legal measure. Neither a directive label nor a German contract precedent settles the Swiss distributor's position.19Handelsgesetzbuch (HGB) vom 10. Mai 1897 (RGBl 1897, 219), § 89b.
The governing-law clause can be equally significant when the distributor's claim is framed as a rule that cannot be waived. The domestic prohibition on contracting out of an indemnity and the conflicts rule determining which law governs it are distinct. A submission that establishes one proposition does not establish the other. A cross-border distribution dispute may consequently turn on the applicable legal system before the parties reach the evidence about customers or the amount demanded.
For counsel handling a Swiss replacement, the unresolved questions are concrete. Did the principal promise exclusivity, or did it merely refrain from appointing anyone else? Does the retained customer business reflect the distributor's work, and what benefit remains after the relationship ends? Which entity holds the authorization or representative mandate when the commercial notice expires? If cooperation fails, does the agreed forum provide a remedy that addresses the disputed records or goods in time for the separate regulatory process? These questions connect the exit cost to the actual relationship, rather than the termination clause alone.