A distributor agreement, also known as a distribution agreement, is a contract between channel partners that stipulates the responsibilities of both parties. The agreement is usually between a manufacturer or vendor and a distributor but in some cases may involve two distributors or a distributor and some other channel entity.
The basic elements of a distribution agreement include the term (time period for which the contract is in effect), terms and conditions of supply and exclusivity or non-exclusivity. An exclusivity agreement, for example, stipulates that the specified distributor will be the only one with the right to sell the product within a particular geographic area.
Following is a checklist of agreements to be considered when drafting a distribution contract:
- Terms and conditions of sale.
- Term for which the contract is in effect.
- Marketing rights.
- Trade mark licensing.
- Exclusivity or non-exclusivity.
- The geographical territory covered by the agreement.
- Circumstances under which the contract may be terminated.