Minnesota has amended the Minnesota Termination of Sales Representatives Act (“MTSRA”), again.
Minnesota Statutes Section 325E.37, subdivision 7, has been amended to read as follows:
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;
(2) a choice of venue in any other state; or
(3) a waiver of any provision of this section.
(b) Any term or provision described in paragraph (a) is void and unenforceable.
(The new language is in bold italics). The amendment is intended to protect sales reps from being forced to litigate claims in another state where a court might not apply Minnesota law.
The Minnesota Termination of Sales Representatives Act
The Minnesota Termination of Sales Representative Act , Minn. Stat. § 325E.37, provides legal protections for independent contractor sales representatives who reside in, or whose sales territory includes, the State of Minnesota. This includes protection against termination of oral or written contracts between the sales representative and its principal, usually a manufacturer.
The Act only applies to a sales rep “who contracts with a principal to solicit wholesale orders and who is compensated, in whole or in part, by commission.” Subd. 1(c). A “person,” as defined by the Act, includes natural persons, partnerships, corporations, and all other entities. Subd. 1(d). However, the Act does not cover a person who: (1) is an employee (not an independent contractor); (2) purchases goods for the person’s own account for resale; (3) holds goods on a consignment basis for the principal’s account for resale; or (4) solicits orders for sale to an “end user,” rather than for resale. Subd. 1(d)(1-4).
The MTSRA was last amended in 2017 to clarify its application to reps who sell to companies that incorporate components into other products.
The changes become effective August 1, 2022, and applies to sales representative agreements entered into, renewed, or amended after that date.
Although seemingly modest, this change makes it even more difficult for manufacturers to avoid application of the MTSRA. If you have questions about the Minnesota Termination of Sales Representatives Act, contact the Minnesota sales rep attorneys at Trepanier MacGillis Battina, P.A.
About the Author
Craig W. Trepanier is a Minnesota sales representative attorney who handles disputes under the Minnesota Termination of Sales Representatives Act. He can be reached at firstname.lastname@example.org or at 612-455-0502.