Vendor May Not Raise Prices In Order To Preclude Reseller From Market
In Robogroup T.A.K Ltd. v. Poriya Systems Ltd. the Tel Aviv District Court held that a vendor may not increase the sale price of its products in order to preclude a distributor from selling vendor’s products.
According to the distribution contract in question in Robogroup, the vendor had a right to update the price list for the products sold by the distributor. Since vendor did not have the right to terminate the agreement it updated the price list by significantly raising the price of the products so that the distributor was effectively barred from selling the products in the market.
Honorable Judge Zaft presiding over the preliminary injunction proceedings ruled that vendor’s conduct was a misuse of contractual rights, as the right to update the price list was to be used only to compensate for change in production costs or market changes. The court ruled that the right to update the price list was not intended to grant vendor the power to harm the distributor’s legitimate contractual expectations and therefore granted a temporary injunction in favor of the distributor.
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