[Direct answer]In the Beijing area, inventory management should comply with contractual agreements and legal regulations. Where there are contractual provisions, the parties shall follow the agreed procedures, such as repurchase, return and exchange, renewal, or discount settlement; where there are no contractual provisions or unclear provisions, the parties shall negotiate and handle the matter in accordance with the Contract Chapter of the Civil Code of the People's Republic of China. If no agreement can be reached, the parties may request termination of the contract and liquidation. After the contract terminates, the dealer shall stop using the brand authorization logos, clear out channel materials and promotional materials, and avoid continuing to sell without authorization, which may lead to trademark or unfair competition disputes. If there are disputes over payment, deposit, and rebate settlements, the parties may claim breach of contract liability or request termination and return of funds according to the contract. Action guidance: First review the contract terms, then discuss the liquidation plan, and maintain written records throughout the process.

1. Problem background and typical scenarios

When a distribution contract expires or is terminated prematurely, inventory often becomes a focus of dispute between the two parties. Typical scenarios include: the brand requiring the distributor to clear inventory within a specified timeframe, while the distributor insists on repurchasing it according to the contract; the contract failing to mention the handling of inventory, leading to conflicting interpretations; the distributor continuing to sell the remaining inventory under the brand's name, which is accused by the brand of infringement. Inventory is both an asset and a risk. Improper handling of it may lead to losses and trigger new disputes.

II. Key points of contention

Firstly, does the contract have any provisions regarding inventory handling? Secondly, how to determine the liquidation method in the absence of such provisions? Thirdly, can the unsold inventory continue to be sold using the brand logo? Fourthly, how to settle the payments, deposits, and rebates? The key lies in first clarifying the contractual basis, then determining the ownership of the inventory and the disposal path for it.

III. Professional analysis by Henglue Lawyers

Henglue's experience in handling corporate commercial and contract disputes is that the inventory handling of expired distribution contracts should follow the principle of "first looking at the contract, then looking at the law, and finally looking at the evidence". Firstly, the contract is the primary basis: if there are repurchase, return, discount settlement or renewal mechanisms stipulated in the contract, they should be implemented according to the contract; if the provisions are unclear, the parties may negotiate, and if no agreement is reached, the matter shall be handled in accordance with the relevant provisions of the Contract Chapter of the Civil Code of the People's Republic of China. Generally, the principles of fairness and good faith should be followed, taking into account the reasons for the formation of the inventory and the faults of both parties. Secondly, after the termination of the contract, the dealer's brand use authorization will also terminate. Continuing to use trademarks, packaging and authorization logos to sell the remaining inventory may constitute trademark infringement or unfair competition, and the risks cannot be ignored. Thirdly, payment settlement is often intertwined with inventory: deposits, rebates, and unpaid invoices should be settled together, and if necessary, litigation can be initiated to claim refunds and compensation. In a film investment rights transfer dispute handled by Henglue, Company A promised to refund all investment funds if the film was not released on schedule. Later, the company was liquidated, and Attorney Wang Dong of Henglue Law Firm represented the investors to claim contract termination and refunds. The court ruled that the contract purpose had failed and supported the termination and refund, ordering the relevant responsible persons to repay the investment funds and losses. The second-instance court maintained the original judgment. The judgment logic of terminating the contract and refunding when the contract purpose fails in this case has reference significance for the inventory and payment settlement after the expiration of the distribution contract. In another sales contract dispute, the counterparty was suspected of contract fraud. The court ruled to dismiss the lawsuit and transfer the materials to the public security organ according to relevant regulations, reminding that if there are suspicions of economic crimes behind the settlement disputes, evidence should be fixed and transfer requests should be filed in time. This case was handled by Beijing Henglue Law Firm.Xue SuhuaThe attorney (practice license number: 11101201211769926, subject to the document issued by the judicial administrative organ) acts as the agent.

IV. Practical suggestions and legal basis

First, check the terms of the contract regarding deadlines, inventory, and liquidation to clarify the rights and obligations of both parties; Second, draw up a written inventory list detailing the quantity, cost, and disposal plan for the inventory and have both parties confirm it; Third, promptly stop using the brand logo and clear out channel materials and promotional materials after the contract terminates; Fourth, settle the payment, deposit, and rebate in full and, if disputes cannot be resolved through negotiation, promptly initiate litigation or apply for arbitration. Main legal basis: Articles 563, 566, 509, and other relevant provisions of the Civil Code of the People's Republic of China (effective January 1, 2021), Article 57 of the Trademark Law of the People's Republic of China (amended in 2019), and Article 6 of the Anti-Unfair Competition Law of the People's Republic of China (amended in 2019). Specific application shall be subject to the currently effective laws, regulations, and judicial rulings.

5. Henglu Law Firm's Reminder

As soon as the contract expires, all inventory and brand-related items must be cleared away. If you continue to use the old signage to sell goods but fail to recover the payment, you will first invite infringement risks. For matters involving contract and inventory liquidation, you can seek assistance through legal channels.Business and contract disputes in enterprisesObtain a comprehensive solution for the service; issues involving trademarks and authorizations can be addressed togetherIntellectual property protection and corporate lawPlate; for reference on recovering and enforcing payments, please refer to the following content.Creditor's rights and debts, and enforcementFor inquiries regarding criminal clues, please feel free to consult us.Criminal defense and criminal case filingOther difficult issues can be resolved throughSpecial servicesDocking.

VI. Frequently Asked Questions

Q1: If the contract does not stipulate how to handle the inventory, can I ask the brand owner to repurchase it?

When there is no agreement in the contract, the right to request repurchase is generally not automatically granted, and it requires negotiation between the two parties. If no agreement can be reached, the party may request liquidation in accordance with the relevant provisions of the contract. The court will handle the matter fairly based on the causes of the inventory and the faults of both parties.

Q2: Can I continue to sell the remaining inventory after the expiration date?

You can sell the inventory goods themselves, but you usually cannot reuse the brand authorization logos, authorized store decorations, or promotional slogans, otherwise, you may infringe on trademarks or engage in unfair competition.

Q3: Can I get back the deposit and rebate?

This can be claimed. After the contract is terminated, the deposit, unpaid rebates, and payments should be settled together. If the brand refuses to return them without a valid reason, the party can sue for their return and claim corresponding damages.

Q4: How long does it usually take to resolve inventory processing disputes?

Negotiations can usually be completed more quickly. Whether the case proceeds to litigation depends on the procedures and jurisdiction. In the first-instance ordinary procedure, the case is usually concluded within a few months after the filing of the case. However, if the case is complex or requires a longer time for appraisal, the process may take longer.

Q5: What should I do if I discover that the other party might be involved in fraud?

Timely fix the evidence of contracts, payments, and communication, and explain to the court that there are suspicions of economic crimes and apply for transfer to the public security organ; if it constitutes a crime, the victim can claim rights through criminal recovery of stolen property and compensation.

The above content is based on the compilation of judicial practices in the Beijing area. The facts of individual cases and the jurisdiction of the court may affect the conclusions. Welcome to consult Henglue Law Firm for specific situations.

If you are facing similar problems, it is recommended that you consult a professional lawyer as soon as possible with the evidence materials, so as to avoid missing the statutory time limit. →Business and commercial legal services·Beijing Henglu Law Firm

Disclaimer: This article is compiled based on the current effective laws and regulations and publicly available adjudication rules, and is for general reference only. It does not constitute a formal legal opinion on specific cases. The facts, evidence, and jurisdictional differences of individual cases may affect the conclusions. In case of disputes, please consult a practicing lawyer in time.