Minnesota law has long protected from termination without cause sales representatives who represent manufacturers, wholesalers, assemblers or importers and solicit wholesale orders. Until recently, this law could be circumvented by contractual choice-of-law clauses providing for the application of the laws of another state. But in an amendment effective August 1, 2014, the legislature has now declared void and unenforceable any provision of a sales representative agreement that calls for application of another state’s law. The amendment applies to all sales representative agreements entered into after its effective date, as well as those renewed or amended after that date. Despite the Constitution’s general protection of contractual freedom, the amendment’s provision that application of another state’s law is void and unenforceable is common, and the Supreme Court has recognized states’ interest in regulating contracts as a countervailing force to the freedom of contract.

The new language in Minn. Stat. 325E.37, Termination of Sales Representatives, reads:

Subd. 7. Prohibition of inclusion of certain unfair contract terms in sales representative agreement.

(a) No manufacturer, wholesaler, assembler, or importer shall circumvent compliance with this section by including in a sales representative agreement a term or provision, whether express or implied, that includes or purports to include:

(1) an application or choice of law of any other state; or

(2) a waiver of any provision of this section.

(b) Any term or provision described in paragraph (a) is void and unenforceable.

Read the entire statute on the Revisor’s web site: https://www.revisor.mn.gov/statutes/?id=325e.37

For more information about any issues relating to the termination of sales representatives, contact Keith Broady.