Distribution Agreements
A Distribution Agreement is a contract between a distributor of products and a supplier of products that are legally binding. An agreement is drafted, when a distributor agrees to resell another’s party’s products.
There are two types of supply and distribution agreements. The first agreement is an Exclusive Agreement in which a supplier gives coverage to a distributor, allowing them to have control over a region, products and sales channel. The second agreement is a Non-Exclusive Agreement, where the supplier may select other parties to distribute the products in the marketplace or the suppliers will act as a distributor themselves.
For instance, a supplier and distribution agreements should include, Identifying parties, Product, Territory and Market, Duties, Obligation, and Confidentiality, Terms, Pricing and Promotion and Resolution and Contract of Termination. As a result, who is involved in the operation and at what capacity. The regions to market your product or distribution and have potential to grow. Where the goods are delivered, who is obligated to perform tasks, the title and risk to the products when transferred, how meeting inspection requirements will be made, on what terms products will be processed. The condition of sales, shipping and delivery terms should be discussed and laid out, without any misinterpretation. Trademark licensing and marketing rights should be included as well. Finally, what responsibilities and what conditions each party will act after the contract is terminated, and what products can be returned. In addition, the standard clauses for risk allocation, limitations of liability, indemnification, and legal jurisdictions in which to operate under.
It’s important to have a Distribution Agreement because it lays out the supplier and distributor task, obligations, and terms so that every party who is involved understands their agreement in the operation, without any disruption, causing disadvantages to other parties but instead to bring fairness. To conclude, parties can have a legal professional read over the contract and explain any jargon they don’t understand.
SAM LAW specializes in distribution agreements in Canada and the U.S. If you are looking for help in ensuring you have a solid agreement, please schedule a consultation using the button below today.