A VAR agreement is a legal contract between a manufacturer and a value-added reseller that specifies the rights and obligations of both parties. A VAR purchases a product from a manufacturer, adds value to that product in some way and then resells the product as its own. A VAR agreement specifies the conditions that must be adhered to throughout that process.
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The details of the VAR agreement contract may include:
- The specific products available to the VAR.
- How those products will be marketed.
- The geographical area in which the VAR may resell the products.
- The timeframe during which the contract is in effect.
- Exclusivity or non-exclusivity.
- Sales targets.
- Conditions for product returns.
- Conditions for termination of the agreement.
It's important to ensure that a VAR agreement is in alignment with business goals and that its stipulations are realistic. Because VAR agreements are legally binding, a failure to meet the terms of the contract can result in not only premature termination of the agreement but also legal action and fines.