10 P.R. Laws Ann. § 278

Section 278(d) defines just cause to include the dealer's nonperformance of essential contractual obligations, and whether an obligation was essential and whether just cause existed are questions of fact.

Casco, Inc. v. John Deere Co. · filed 2021-03-02(d)

Law 75 defines "just cause," in relevant part, as "[n]onperformance of any of the essential obligations of the dealer's contract, on the part of the dealer[.]" § 278(d). Whether just cause existed and whether "essential obligations" were breached are questions of fact.

Section 278(d) treats a dealer’s inability to perform the essential obligations of the dealer’s contract, including marketing and selling the supplier’s products, as just cause for termination.

Caribbean Wholesales & Service Corp. v. U.S. JVC Corp. · filed 1997-05-12(d)

However, the litigation, combined with CWS’s financial problems — resulting in its inability to obtain from Chrysler the necessary approvals of JVC orders, and in the release of almost all its remaining JVC inventory — clearly show that CWS was unable to continue to fulfill “the essential obligations of the dealer’s contract,” the marketing and sale of JVC products. P.R. Laws Ann. tit. 10, § 278(d) (1994) (defining “just cause”).

Section 278(d) defines just cause to include a dealer’s failure to perform an essential obligation of the dealer’s contract.

Sheils Title Company, Inc. v. Commonwealth Land Title Insurance Co. · filed 1999-08-26(d)

After careful consideration of the record, we conclude that Commonwealth had “just cause”, as a matter of law, to terminate Sheils as its agent.

Law 75 recognizes actual termination or impairment of a dealership relationship, but not constructive termination.

Alvarez-Rivera v. United States · filed 2021-03-02

In short, Law 75 recognizes actual termination, or alternatively, impairment. The statute does not recognize constructive termination.

Section 278 protects an established dealer relationship from detrimental acts or nonrenewal by a principal or grantor absent just cause.

Meta Med LLC v. Insulet Corporation · filed 2024-04-23

In essence, Law 75 looks to avoid the inequity of the arbitrary termination of a distribution relationship, and states that “no principal or grantor may directly or indirectly perform any act detrimental to the established relationship or refuse to renew said contract on its normal expiration, except for just cause.” P.R. Laws Ann. tit. 10, §§ 278, 278a; ... However, Law 75 is very clear in that it applies to a “principal or grantor” and that a dealer’s contract is defined as the “relationship established between a dealer and a principal or grantor” of the products in question. P.R. Laws Ann. tit. 10, §§ 278, 278a. ... Thus, as a matter of law, Law 75 is inapplicable to their relationship with Plaintiffs. ... In sum, the Court today follows the long list of cases that have held that Law 75 applies only to grantors or principals. The fact that other parties were participants in the distribution chain does not make them principals. For this reason, the relationship between DDP, GEMCO and Plaintiffs is not protected under Law 75, as they were not principals or grantors that would make Law 75 applicable.

Section 278(b) permits a dealer’s contract to arise without a written agreement.

Yacht Caribe Corp. v. Carver Yacht LLC · filed 2017-08-23(b)

It is also irrelevant whether the relationship is “committed to writing”, because a dealer’s contract may be established irrespective of the way in which such relationship is executed.

Section 278(a)'s dealer definition requires a substantial local business presence, but Law 75 may apply to a distributor whose operations are concentrated in Puerto Rico even when part of its commercial territory lies outside Puerto Rico.

Beatty Caribbean, Inc. v. Viskase Sales Corp. · filed 2003-01-10(a)

The Court of Appeals for the First Circuit has interpreted the dealer’s definition to require that the substantial part of the dealer’s business operate locally. ... Based on the foregoing it may reasonably be concluded that Puerto Rico has explicitly enunciated its interest in regulating commercial relationships involving local distributors. We find that this interest applies to distributors such as BEATTY regardless of the fact that part of their commercial interests may extend beyond our geographical boundaries given the extent of their local presence.

Section 278 does not treat a sales representative as a dealer when the representative makes no investment in distribution, assumes no responsibility for deliveries or collections, and lacks authority to complete sales.

Ebi, Inc. v. Gator Industries, Inc. · filed 1986-12-10(a)

Where, as here, a sales representative makes no investment in promotion, inventories, or facilities; has no responsibilities for credit, collections, shipment or deliveries; and, in addition, has no power to determine whether a given buyer has bound the principal to sell certain goods under certain terms and conditions, we conclude that the sales representative has not risen to the status of “dealer” under Law 75, as the Supreme Court of Puerto Rico has interpreted that law.

Section 278(a) covers distributors of goods in Puerto Rico and allows them to invoke Law 75’s protections.

Caribbean Wholesales & Service Corp. v. US JVC Corp. · filed 1994-06-14(a)

Accordingly, it is quite plain that Law 75 is intended to be a mandatory scheme regulating the contractual relations of all parties distributing goods in Puerto Rico. See P.R.Laws Ann. tit. 10, § 278(a) (1978). Since Caribbean Wholesales is such a party, it may properly invoke the protections of Law 75.

Section 278(b) defines dealer status by a person’s activities in distributing merchandise or services, rather than by the type of merchandise.

Jorge Rivera Surillo & Co. v. Cerro Copper Products Co. · filed 1995-05-08(b)

Act 75 does not define dealer in terms of the merchandise but in terms of the person’s activities in relation to the merchandise or service.

Section 278(b) requires an established dealer relationship; a seller’s unilateral efforts to develop a market do not create one.

Euromotion, Inc. D/B/A Prime Wholesalers v. Bmw of North America, Inc. · filed 1998-02-24(b)

However, unilateral efforts to sell a product and develop a market are not sufficient, alone, to create a dealer relationship within the purview of Law 75.

Section 278(b) recognizes a dealer's contract formed through the parties' course of dealing without a formal offer and acceptance.

Jose Santiago, Inc. v. Smithfield Packaged Meats Corp. · filed 2023-04-25(b)

More fundamentally, Smithfield's argument premised on the absence of a formal offer and acceptance fails because Law 75 recognizes a dealer's contract "irrespectively of the manner in which the parties may call, characterize or execute such relationship." P.R. Laws Ann. tit. 10, § 278(b).