FASHION LAW
RTVs – what do they mean for agents and their principals?
As many parts of retail remain under pressure, the use of RTV – return to vendor – is on the rise. But what does this mean for principals and agents?
C
overing the situation in which the supplier (say, a brand) and the purchaser (usually a retailer) agree on the return of goods supplied, sometimes a supplier and the retailer will have agreed at the outset that goods will be supplied on a RTV basis. In this situation usually the retailer will have the right to return unsold inventory. Correspondingly the supplier will be bound to take back such inventory on the terms set out in the RTV agreement.
For example, if an electronic goods retailer is only able to sell 50 per cent of tablets supplied and an RTV agreement was entered into before the goods were supplied, then depending on the
terms of the RTV agreement the retailer may be able to return all or part of the unsold stock at the agreed return price.
Often, however, a RTV agreement is not made before the goods are supplied. In this situation it will usually be the case that the retailer contacts the supplier and, depending on the strength of their respective bargaining positions, an agreement is reached to take back stock on specified terms.
Sometimes a brand will be prepared to take back stock in order to preserve any one or more of: the relationship with the retailer; brand reputation – not least to prevent goods being sold through outlets; its ESG position and avoid
the goods going to landfill; or simply its end of season sell-through figures. In essence, the supplier is preserving a degree of control.
Agents and principals – the position
RTVs are good news for the retailer. It has been able to offload stock which it will not be able to sell. For the supplier the news is not so good. But what about the agent which helped build the relationship with the retailer and procured the order in the first place? In particular, should the agent be subject to a clawback of the commission which was received in respect of the order? It depends…
36 • FOOTWEAR TODAY • JUNE 2024
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