Final answer:
Seeking legal advice is advisable when entering distribution contracts with middlemen to ensure compliance with competition laws and avoid restrictive practices such as illegal minimum resale price maintenance agreements. The correct answer is true.
Step-by-step explanation:
When entering distribution contracts with middlemen, it is indeed advisable to seek legal advice. This ensures that both parties, the manufacturer and the dealers, operate within the bounds of legal regulations pertaining to commerce and competition. For example, in the context of a product manufacturer and a group of dealers, the law states it is illegal to enforce a minimum resale price maintenance agreement. Such agreements are prohibited because they restrict competition amongst dealers by setting a fixed minimum selling price.
Manufacturers, however, are permitted to suggest recommended retail prices, providing a subtle yet significant distinction. Due to the complexity of legalities such as this, manufacturers are advised to consult with legal professionals to comply correctly without violating competition laws. This not only sidesteps potentially costly legal disputes but also ensures a fair business environment. It's essential to recognize that consultation with legal experts can prevent inadvertent engagement in unlawful practices such as restrictive contracts that could lead to penalties or litigation.
Therefore, while not explicitly required by law, obtaining legal counsel when creating distribution contracts can be crucial for safeguarding the interests of the business and maintaining fair market practices. Ultimately, the correct option for the question 'Is legal advice necessary when entering distribution contracts with middlemen?' would be 1) True.