Can a Korean Distributor Continue Selling After the Distribution Agreement Ends?

Short Answer

Potentially, yes — but only within limits.

If a Korean distributor has already lawfully purchased and obtained ownership of genuine inventory, the distributor may have an argument that it can continue selling that inventory after the distribution agreement ends, unless the contract clearly provides otherwise.

However, selling remaining inventory is different from continuing to use the supplier’s brand, trademarks, official distributor status, online channels, customer data, marketing materials, confidential information, or technical materials.

In practice, post-termination disputes often turn on the difference between reselling genuine inventory and continuing to act as if the distributor relationship still exists.

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Why Does This Become a Dispute?

Distribution relationships often do not end cleanly.

After termination or expiration, the Korean distributor may still hold remaining stock, spare parts, samples, brochures, price lists, customer data, product images, technical materials, online listings, domain names, or social media pages connected to the supplier’s products.

The foreign supplier may want all sales to stop immediately. The distributor may argue that it owns the inventory and should be allowed to sell it.

The key question is therefore not only whether the agreement ended, but also what rights and obligations survive after termination.

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Key Post-Termination Issues Foreign Suppliers Should Consider

Issue 1: Remaining Inventory and Sell-Off Rights

The first question is whether the distributor owns the remaining inventory.

If the distributor already purchased genuine products and title has passed, the distributor may argue that it can sell its own inventory unless the contract provides for sale prohibition, return, buy-back, destruction, or a limited sell-off period.

A distribution agreement should therefore clearly state what happens to unsold inventory after termination, including:

• Whether sales must stop immediately
• Whether a sell-off period is allowed
• Whether the supplier has a buy-back right
• Whether inventory must be returned
• Whether obsolete or non-compliant products must be destroyed
• How pending orders will be handled

Without these provisions, the distributor may have a stronger argument that it can dispose of inventory it already owns.

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Issue 2: Trademark Use and Official Distributor Status

Even if the distributor can sell genuine inventory, that does not necessarily mean it can continue using the supplier’s brand as an official distributor.

The distributor should not continue to suggest that it is an authorized distributor, official agent, exclusive dealer, certified reseller, or current partner if that relationship has ended.

This issue often arises through:

• Website language
• Online store descriptions
• Search advertisements
• Social media pages
• Catalogues and brochures
• Signage
• Email signatures
• Product images and logos

The contract should clearly state when trademark and brand-use rights end and what limited use, if any, is permitted during a sell-off period.

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Issue 3: Genuine Goods and Trademark Exhaustion

Post-termination sales often involve genuine goods.

Where genuine products were placed on the market by the trademark owner or with the trademark owner’s consent, the distributor may have an argument that resale of those genuine goods does not itself infringe the trademark.

However, that does not give the distributor unlimited rights.

Problems may still arise if the distributor:

• Misleads customers about its current relationship with the supplier
• Uses trademarks beyond what is necessary to identify the goods
• Repackages, modifies, repairs, or alters products in a way that affects their identity or quality
• Uses old official images, certificates, or authorization marks
• Continues operating online pages that imply official status

In other words, resale of genuine goods and continued brand authorization are separate issues.

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Issue 4: Online Listings, Domains, and Marketplace Pages

A distributor may continue to control product pages on online marketplaces, its own website, or domains containing the supplier’s brand.

This can create significant risk if those channels suggest that the distributor remains the official Korean distributor or authorized sales channel.

The agreement should require the distributor, upon termination, to:

• Remove official distributor statements
• Stop using authorization marks
• Transfer or stop using brand-related domains where appropriate
• Remove misleading advertisements
• Update online marketplace pages
• Stop using supplier-provided product images except as expressly permitted

Online sales channels should be addressed expressly because they often remain visible long after the contractual relationship ends.

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Issue 5: Customer Lists, Pricing, and Technical Materials

A distributor may also hold sensitive commercial and technical information, including:

• Customer lists
• Dealer contacts
• Pricing policies
• Discount structures
• Sales strategy
• Technical manuals
• Product training materials
• Warranty records
• Regulatory or certification documents

If these materials include confidential information or trade secrets, the distributor’s continued use after termination may create legal risk.

The contract should provide for return, deletion, access termination, certification of deletion, and survival of confidentiality obligations.

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Issue 6: Warranty, Recall, and After-Sales Support

Post-termination sales may also affect customers who need warranty service, spare parts, repairs, product updates, or recall support.

The contract should clearly allocate responsibility for:

• Pending customer orders
• Warranty claims
• Spare parts
• Product complaints
• Recalls
• Regulatory notices
• Transition support

Without clear rules, the supplier and distributor may blame each other when customers raise issues after termination.

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Why a Termination Clause Alone Is Not Enough

Many distribution agreements explain when a party may terminate but do not explain what happens afterward.

That is a major drafting gap.

A strong distribution agreement should address both termination rights and exit mechanics, including inventory, sell-off rights, trademark use, online channels, customer data, confidential information, warranty support, and transition obligations.

Without these provisions, the parties may end up disputing the consequences of termination even after the agreement itself has ended.

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Practical Drafting Tips for Foreign Suppliers

Foreign companies appointing Korean distributors should consider including clauses that address:

• Post-termination sell-off rights
• Inventory return or buy-back procedures
• Trademark and brand-use restrictions
• Removal of online listings and advertisements
• Use or transfer of brand-related domains
• Return or deletion of confidential information
• Customer transition obligations
• Warranty, recall, and after-sales responsibilities
• Restrictions on competing products
• Consequences of unauthorized sales or misleading brand use after termination

These issues should be negotiated at the beginning of the relationship, when both sides still expect the partnership to succeed.

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Conclusion

A Korean distributor does not automatically have unlimited rights to continue selling after a distribution agreement ends.

If the distributor owns genuine inventory, it may have a basis to argue for continued resale, especially where the contract does not clearly prohibit post-termination sales or provide a buy-back mechanism.

However, continued resale is different from continued use of official distributor status, trademarks, online channels, customer data, confidential information, or technical materials.

For foreign suppliers, the safest approach is to draft the distribution agreement so that the end of the relationship is as carefully planned as the beginning.

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