Distribution Agreement

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What is it?

A Distribution Agreement is a contract between a manufacturer or supplier of goods and a distributor. The agreement may further define the terms and conditions under which the distributor may re-sell the products provided by the supplier.

A Distribution Agreement may be categorised as either exclusive or non-exclusive. In an exclusive Distribution Agreement, the supplier appoints another party as the only distributor of its goods or products in a particular territory. There can be different exclusive distributors for different product lines from the same manufacturer in a particular territory.

Why do you need it?

The Distribution Agreement covers the terms of the supply, including the delivery of goods, the transfer of risk in and title to the goods, inspection requirements, and returns.

Whether you are the party supplying or distributing the goods, it is important that you specify the terms of your cooperation from the start so that you can avoid future misunderstanding.

Informal or poorly written agreements often lead to legal conflicts that in turn consume time and financial resources. A well-written agreement can prevent the unnecessary waste of such resources.

Key clauses to watch for:

When drafting a Distribution Agreement, it is important to focus on a number of key clauses, in particular:

  • Your business and product information;
  • Supplier's and distributor's rights and obligations;
  • Terms of supply, including price, payment, delivery, and transfer of risk;
  • Exclusivity or non-exclusivity;
  • Territorial or other scope of the agreement;
  • Non-compete obligations;
  • Duration of the agreement and renewals;
  • Termination and compensation;
  • Import permits and taxation; and
  • Insurance.

Distribution Agreement Document

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