Dealer agreements in Czechia: what every auto importer should watch for

Mgr. Vojtěch Sucharda
Mgr. Vojtěch Sucharda
26.3.2026 | ARROWS law firm

Dealer agreements in the Czech Republic operate as innominate contracts requiring careful drafting to avoid costly disputes and regulatory exposure, particularly concerning EU competition law and anti-money laundering obligations. Failure to properly structure these agreements, define territorial rights, or implement compliance systems can result in massive fines reaching 10% of turnover or administrative penalties up to CZK 10 million.

Photo shows a lawyer consulting about Czech dealer agreements compliance.

Dealer agreements form the backbone of automotive distribution networks across the Czech Republic, yet many importers and distributors operate under agreements that expose them to substantial legal and financial risks they don't fully understand. Unlike jurisdictions with dedicated dealer legislation, the Czech Republic treats dealer agreements as general commercial contracts governed by the Civil Code.

This creates a deceptively complex landscape where seemingly straightforward distribution arrangements can trigger regulatory investigations, costly arbitration disputes, and fines that threaten business viability.

In this article, you will discover exactly what provisions your dealer agreement must contain and what hidden compliance obligations you face. Understanding the Czech legal framework will help you structure sustainable, compliant relationships with your dealers and avoid the pitfalls that have caught many established importers off guard.

Understanding dealer agreements under Czech law

Dealer agreements in the Czech Republic occupy an unusual legal position compared to many other European jurisdictions. The Czech legal system does not recognise a specific contract type called a "dealer agreement" or provide dedicated legislation governing dealer relationships in the automotive sector.

Instead, Czech law treats all dealer agreements as innominate contracts (Section 1746 of the Civil Code)—general commercial arrangements that incorporate elements of purchase agreements, mandate agreements, and licensing arrangements.

The primary legal framework governing dealer agreements in Czechia is the Civil Code, particularly sections dealing with obligations, breach of contract, damages, and general principles of contractual performance. Since dealer agreements do not fit neatly into pre-defined legal categories, their legal treatment depends on how courts interpret their actual substance.

A dealer agreement that purports to be a simple purchase arrangement might be reclassified by a court as a commercial agency if the dealer operates primarily in the supplier's name and acts as an agent rather than an independent merchant. This reclassification can trigger entirely different legal consequences, including statutory rights to special indemnity compensation.

ARROWS Law Firm regularly handles complex dealer agreement structures with an international element, advising foreign automotive importers on how to structure their Czech distribution networks in compliance with both Czech law and EU regulations.

Many business owners believe that if they sign a contract calling itself a "dealer agreement," the legal consequences are clear and predictable. In reality, Czech courts do not treat the contractual label as determinative.

Instead, courts examine the actual substance of the relationship and the parties' true intentions to determine what type of agreement exists.

The legal implications of this reclassification can be severe, especially if a dealer lacks independent pricing power and functions as an integrated part of the supplier's network. This reclassification would trigger statutory rights to special indemnity compensation—a payment owed to the commercial agent upon termination based on the customer relationships generated.

ARROWS Law Firm has advised clients on reclassification risks after disputes arose, and the firm emphasizes structuring agreements to reflect the true nature of the relationship.

1. What is the main difference between a dealer and a commercial agent under Czech law?
A dealer purchases goods into its own name and ownership, resells them for its own account, and bears the commercial risk of unsold inventory. A commercial agent (Section 2483 Civil Code) acts in the supplier's name or on the supplier's behalf, receives commissions, and generally has lower independent commercial risk.

2. If my dealer agreement is reclassified as an agency, what financial obligations will I face?
You may owe special indemnity compensation calculated on the customer relationships and business the agent generated (Section 2514 Civil Code). The compensation is typically capped at the average annual commission over the past five years or the entire duration of the relationship if shorter.

3. Can I prevent reclassification by simply labelling my agreement as a "dealer agreement" rather than an "agency agreement"?
No. Czech courts look at substance (Section 555 Civil Code), not labels. Reclassification depends on factual circumstances: who owns inventory, who bears commercial risk, who sets prices, and the degree of integration into your network.

Competition law constraints: the VBER and Czech competition office scrutiny

Dealer agreements in Czechia do not operate in a vacuum. They are vertical agreements—arrangements between parties operating on different levels of a distribution chain—and as such, they are subject to strict competition law scrutiny.

The primary framework is the EU Vertical Block Exemption Regulation (VBER), which applies directly in the Czech Republic, combined with the Czech Competition Act.

Under EU competition law, vertical agreements that impose restrictions on competition are presumptively prohibited unless they qualify for an exemption. The most common exemption is the VBER, which provides a safe harbor for vertical agreements if certain market share thresholds and conditions are met.

Many automotive suppliers exceed these thresholds, meaning they cannot rely on the block exemption and must instead prove that their vertical agreement qualifies for exemption under general criteria.

Even if the market share threshold is satisfied, the agreement must not contain "hard-core" restrictions like resale price maintenance (RPM). The Czech Competition Office (ÚOHS) has dramatically intensified enforcement against vertical agreements in recent years, particularly focusing on RPM and exclusive dealing arrangements.

ARROWS Law Firm conducts competition law audits of dealer agreements for automotive importers and distributors, ensuring that territorial provisions, pricing clauses, and distribution restrictions comply with both the VBER and Czech Competition Act requirements.

1. Does my dealer agreement need to comply with competition law even if it is just between me and one dealer?
Yes, if the agreement has an appreciable effect on trade. Hard-core restrictions like RPM are considered to have such an effect by object. The EU Vertical Block Exemption Regulation applies to individual agreements that meet the threshold and exemption conditions.

2. What is "resale price maintenance" and why is the Czech Competition Office so focused on it?
RPM occurs when a supplier fixes or maintains minimum (or sometimes fixed) retail prices that dealers must charge consumers. The Czech Competition Office views RPM as a severe infringement and has shifted to aggressive enforcement with fines calculated as a percentage of turnover.

3. If my dealer agreement contains a provision that might violate competition law, can I be fined?
Yes, and fines can reach up to 10% of your total annual turnover (or the turnover of your corporate group). Even unintentional violations can result in substantial administrative fines. Additionally, competitors or customers harmed by your agreement can pursue damages.

Essential structural elements: what must be in your dealer agreement

Beyond competition law constraints, Czech law requires that dealer agreements contain certain essential structural elements to create enforceable rights and obligations and to minimize disputes. The Civil Code principles require clarity on the parties' intentions, the scope of the dealer's authority, and termination conditions.

Territory and exclusivity: defining the dealer's geographic scope

Your dealer agreement must clearly define the geographic territory in which the dealer is authorised to operate and whether the arrangement is exclusive or non-exclusive. This provision seems simple but contains numerous hidden complexities, particularly regarding the distinction between active and passive sales.

If your agreement creates an exclusive territory for one dealer, you generally cannot prevent other dealers from making passive sales to customers in that territory.

Additionally, the agreement should clarify what happens if the territory includes both retail customers and commercial customers. Many automotive importers distinguish between these categories, allowing dealers to sell to retail customers but restricting sales to fleet customers who should be served by the supplier directly.

Authority and representation: can the dealer bind you?

The dealer agreement must explicitly state whether the dealer has authority to negotiate and conclude contracts on the supplier's behalf or whether the dealer merely solicits orders. Under Czech law, if a person acts on your behalf at your place of business, they are presumed to have authority to bind you.

If the dealer makes inconsistent promises to different customers or overstates vehicle condition, you could face liability unless the agreement clearly states that the dealer acts in their own name.

For importers dealing with used vehicles, this distinction is critical. When a dealer in Czechia receives a vehicle from a German importer and then resells it to a Czech consumer, disputes often arise about who made representations regarding vehicle condition.

Obligations of both parties: creating clear performance standards

The agreement must specify the obligations of both the supplier and the dealer. For the dealer, obligations typically include acquiring customers, safeguarding the supplier's interests, maintaining confidentiality, and achieving minimum sales volumes.

Specific measurable standards are preferable to vague phrases, such as defining minimum inventory levels or annual sales volume targets.

Similarly, support obligations should be defined, such as who provides training or pays for advertising. The agreement should be specific enough that both parties understand their obligations and courts can determine whether performance has been adequate.

Financial terms and risk allocation: pricing, payments, and inventory management

Dealer agreements involve complex financial arrangements that require careful structuring to allocate risk appropriately and to comply with various regulations. The agreement must address how the dealer obtains vehicles, at what price, on what payment terms, and what happens to unsold inventory if the relationship terminates.

Purchase price and inventory terms

The agreement should establish whether the dealer purchases vehicles at a fixed wholesale price, a price adjusted for mileage or condition, or a price negotiated case-by-case. For importers bringing vehicles from abroad, the purchase price often reflects acquisition and logistics costs plus margin.

Additionally, the agreement must address payment terms and whether the dealer receives credit, which may require consignment arrangements (Komisní smlouva) where the importer retains ownership until the final sale.

Minimum purchase quantities and sales quotas

Dealer agreements frequently include minimum purchase requirements or sales quota provisions. These provisions serve legitimate business purposes, but they must address what happens if the dealer fails to meet the quota to avoid ambiguity regarding termination rights.

ARROWS Law Firm advises importers on structuring minimum purchase and quota provisions that are both commercially sustainable for dealers and compliant with competition law.

Warranty, quality, and liability: managing post-sale obligations

One of the most litigated aspects of dealer agreements is the allocation of warranty and liability obligations for defective vehicles. Under Czech consumer protection law and the Civil Code, the seller of a vehicle bears significant statutory liability to consumers.

The 12-month presumption rule

A critical change in Czech law is the extension of the period during which a defect is presumed to have existed at the time of takeover. This period is now 12 months, meaning that if a defect manifests within one year of the sale to a consumer, the law presumes the vehicle was defective at the time of sale.

A critical question for dealer agreements is who bears this liability, as the dealer agreement often includes provisions that require the importer to reimburse the dealer for warranty costs.

The dealer agreement should explicitly address this allocation. The agreement should define a process for technical assessment of defects and clearly state the extent of the importer's contribution to repair costs for defects covered by the statutory presumption.

1. If a dealer sells a vehicle to a consumer and the vehicle develops a defect after 10 months, who is responsible?
The party directly contracted with the consumer (usually the dealer) is primarily responsible. Because the defect appeared within 12 months, it is presumed to have existed at takeover. The dealer must repair it unless they can prove the consumer caused the defect.

2. What is the presumption of defect existence under current Czech law?
If a defect appears within 12 months of takeover, there is a legal presumption that the defect existed at the time of sale. The seller must disprove this presumption to avoid liability.

3. Can the dealer and importer agree to share warranty costs?
Yes. B2B agreements allow for flexible allocation of liability. You can agree on a flat-rate warranty compensation or a case-by-case reimbursement system. However, you cannot contractually limit the consumer's statutory rights.

Who can you turn to?

Termination, termination fees, and exit rights

Dealer agreements must address how the relationship can be terminated. Czech law provides statutory requirements, but parties can agree to different terms within limits.

Statutory termination requirements

For agreements entered into for an indefinite term, Czech law permits either party to terminate with notice. Under general commercial provisions, the notice period is typically three months, effective by the end of a calendar quarter, unless agreed otherwise.

For definite term agreements, early termination is generally only possible for fundamental breach or if explicitly provided for in the contract.

Termination fees and non-compete obligations

Some dealer agreements include termination fees or penalties, but Czech courts scrutinise these carefully to ensure they are reasonable. Non-compete provisions post-termination are valid but must be reasonable in scope and duration to be fully enforceable without risk of invalidation under competition law.

1. If I terminate a dealer agreement, do I have to buy back all unsold inventory?
Not automatically under statutory law, but it is a standard clause in well-drafted agreements. If the agreement is silent, it creates a flashpoint for disputes.

2. Can I include a non-compete clause that prevents my dealer from selling competing vehicles after termination?
Yes, but strictly limited. Under VBER, post-term non-competes are generally not block-exempted unless they are limited to the premises from which the buyer operated, indispensable to protect know-how, and limited to 1 year.

Anti-money laundering obligations for used car dealers

Many automotive importers and distributors in Czechia are not aware that they are subject to strict anti-money laundering (AML) obligations.

Who must comply and what triggers AML obligations

Under the Czech AML Act, persons who trade in goods are "obliged persons" if they accept cash payments amounting to EUR 10,000 or more. However, specifically for used goods (second-hand dealers), the definition of obliged persons is broader.

Used car dealers and their brokers are explicitly covered as obliged persons and must identify the customer for transactions exceeding EUR 1,000.

Recent enforcement and new obligations

The Czech Financial Analytical Office (FAU) has increased enforcement, and violations of the AML Act can result in fines of up to CZK 10 million. Additionally, recent amendments require obliged persons to designate a specific contact person for communication with the FAU.

Documentation and compliance: creating defensible records

When dealers sell vehicles to consumers, they must comply with the Consumer Protection Act, including proper handling of complaints. Sellers must issue a written confirmation of the complaint immediately and settle the claim within 30 days.

ARROWS Law Firm recommends implementing internal compliance programmes that include written AML policies, documentation protocols for vehicle condition at handover, and warranty claim procedures.

International considerations: cross-border transactions and EU law integration

Vehicles imported from Germany or other EU countries must meet Czech technical standards. The operation of vehicles is governed by specific acts, and imported vehicles generally require a technical inspection and registration.

When an importer acquires vehicles from EU suppliers and sells them in Czechia, EU consumer law principles apply, meaning consumers generally sue the local Czech seller.

Importers operating across multiple EU countries must ensure their dealer agreements do not partition the internal market. Preventing a Czech dealer from selling to a Slovak customer is a serious breach of EU competition law.

Risk assessment: common problems and enforcement actions

Risks and Sanctions

How ARROWS helps (office@arws.cz)

Resale price maintenance fines: Dealer agreements that include minimum resale prices can violate competition law. Fines can reach up to 10% of annual turnover (or group turnover).

Competition law audit: ARROWS Law Firm reviews dealer agreements to identify RPM clauses and restrictions violating Czech or EU competition law.

Commercial agency reclassification: Dealer agreements structured with extensive supplier controls can be reclassified as agency, triggering statutory indemnity compensation.

Agreement restructuring: ARROWS Law Firm analyzes relationship characteristics to assess reclassification risk and restructures agreements to clarify the intended legal relationship.

AML violations: Used car dealers face fines up to CZK 10 million (or higher for specific breaches) for failure to identify customers or report suspicious activities.

AML compliance programme: ARROWS Law Firm establishes internal AML procedures, Systems of Internal Principles, and employee training.

Defective vehicle liability: The 12-month presumption of defect existence creates high liability exposure for dealers and importers.

Warranty compliance: ARROWS Law Firm develops consumer claim procedures and vehicle condition documentation protocols to manage evidentiary burdens.

Termination disputes: Lack of clear termination grounds or inventory repurchase clauses leads to costly litigation.

Termination clause drafting: ARROWS Law Firm drafts specific termination grounds and negotiates exit strategies.

Executive summary for management

Dealer agreements form the backbone of automotive distribution networks in the Czech Republic, yet they remain among the most legally complex commercial arrangements. Unlike jurisdictions with dedicated dealer legislation, Czech law treats dealer agreements as innominate contracts.

For automotive importers and dealers in Czechia, the compliance burden extends to anti-money laundering regulations and strict consumer protection laws regarding liability for defects.

Conclusion of the article

Dealer agreements in Czechia present a complex legal landscape. The lack of dedicated dealer legislation means that general commercial law principles apply, with significant risk of unintended legal consequences.

A comprehensive agreement must clarify the dealer's legal classification, ensure compliance with competition law, establish robust AML procedures, and allocate warranty liability.

ARROWS Law Firm advises automotive importers and dealers on structuring new dealer relationships, reviewing existing agreements, and resolving disputes.

The cost of working with ARROWS Law Firm to properly structure a dealer agreement is significantly lower than the potential cost of disputes or fines.

1. Do I need a written dealer agreement?
Yes. While verbal contracts are valid, written agreements are essential for evidence and regulatory compliance (e.g., demonstrating competition law compliance).

2. Can I use a dealer agreement template from another country?
No. Czech law (Civil Code, AML Act) differs from other jurisdictions. Using a foreign template risks invalidity and compliance breaches.

3. What should I do if a dealer is not meeting sales quotas?
Ensure your agreement specifies the consequences (termination, loss of exclusivity). Document the shortfall and communicate before taking action to avoid disputes over "fundamental breach."

4. What applies if my agreement is silent on warranty liability?
The Civil Code applies. The seller is liable for defects. The 12-month presumption of defect existence applies to consumer sales.

5. What happens if my agreement violates competition law?
Violating provisions are void. You may face fines up to 10% of turnover from the Czech Competition Office.

6. Can I terminate a dealer agreement at any time?
No. It depends on the contract term and grounds. Indefinite agreements generally require notice; fixed-term agreements require fundamental breach or specific contractual grounds.

Disclaimer: The information contained in this article is for general informational purposes only and serves as a basic guide to the issue as of 2026. Although we strive for maximum accuracy, laws and their interpretation evolve over time. We are ARROWS Law Firm, a member of the Czech Bar Association (our supervisory authority), and for the maximum security of our clients, we are insured for professional liability with a limit of CZK 400,000,000. To verify the current wording of the regulations and their application to your specific situation, it is necessary to contact ARROWS Law Firm directly (office@arws.cz). We are not liable for any damages arising from the independent use of the information in this article without prior individual legal consultation.

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