THE RISK THAT DOES NOT APPEAR ON YOUR BALANCE SHEET

Not every business risk appears on a balance sheet as a liability. Some accumulate quietly within aging contracts, scattered emails, tolerated business practices, and commercial relationships that no one has revisited in years.

For many distributors, commercial representatives, and importers of foreign brands, the relationship with a foreign manufacturer or principal appears to be under control: recurring sales, purchase orders, inventory in motion, and a business dynamic that everyone understands simply because it has existed for so long.

Yet in the world of distribution and commercial representation, the greatest risks are not always found in what was signed. More often, they arise from what was never reviewed.

COMMERCIAL RELATIONSHIPS AND HIDDEN LEGAL RISKS

In Costa Rica, the legal framework governing distributors, commercial representatives, and importers linked to foreign manufacturers and principals continues to generate significant disputes.

This is neither an obsolete area of law nor a purely historical issue. On the contrary, recent litigation demonstrates that commercial relationships established ten, fifteen, or even twenty years ago may ultimately be interpreted under legal standards that the parties never anticipated.

These relationships rarely remain static. Over time, commercial practices, expectations, and responsibilities often evolve beyond what was originally documented.

A distribution arrangement that began as a commercial opportunity may gradually become an exclusive relationship, even where exclusivity was never expressly granted.

Likewise, a foreign agreement may coexist with local practices that tell a very different story. An arbitration clause may not produce the effects management expects. A seemingly routine termination may trigger disputes involving compensation, inventory repurchase obligations, customer goodwill, exclusivity, damages, or economic dependence.

IS YOUR COMMERCIAL RELATIONSHIP REALLY STRUCTURED THE WAY YOU BELIEVE IT IS?

The relevant question is not whether the relationship has worked well for years.

The real question is whether it is legally structured in the way the company believes it is.

For a distributor or commercial representative, the risk is far from theoretical. It may involve the loss of a strategic business line, replacement by another operator, the creation of parallel distribution channels, or the abrupt termination of a long-standing commercial relationship.

It may also create uncertainty regarding inventory, customer goodwill, and the investments made over many years to position a foreign brand in the Costa Rican market.

THE IMPORTANCE OF AUDITING INTERNATIONAL COMMERCIAL RELATIONSHIPS

In an environment where Costa Rican imports exceeded USD 27 billion in 2025, thousands of companies depend on international commercial relationships that have not undergone a legal review in years.

Business volume may fluctuate. Legal exposure, however, may remain constant—or increase over time.

For this reason, a legal audit of international commercial relationships can be a valuable business management tool.

Its purpose is not to create conflict.

Its purpose is to identify risk before conflict arises.

Such a review may allow a company to evaluate matters such as:

• The validity and actual scope of the relationship.

• Applicable law.

• Jurisdiction and arbitration.

• Territorial exclusivity.

• Purchase history.

• Economic dependence.

• Committed inventory.

• Relevant communications.

• Implied modifications to the relationship.

• Accumulated contingencies.

ANTICIPATING CONFLICT BEFORE IT IS TOO LATE

A prudent business owner does not wait for a foreign manufacturer or principal to change its strategy, appoint another distributor, or terminate the relationship.

Instead, they review their legal position, organize critical documentation, and address vulnerabilities while there is still time to act.

As a result, if termination does occur, it does not come as a surprise. The company understands its rights, recognizes its risks, and is better positioned to design an effective strategy for negotiation, defense, or commercial transition.

Because once a dispute reaches litigation, the discussion no longer depends on what the company believed it had.

It depends on what it can prove.

And by then, the legal audit that once seemed unnecessary often becomes the very exercise that should have been undertaken years earlier.