distributor agreement (distribution agreement)

A distributor agreement, also known as a distribution agreement, is a contract between a vendor and a distributor that stipulates the responsibilities of both parties.

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. 
  • Non-competition. 
  • Performance. 
  • Reporting. 
  • Circumstances under which the contract may be terminated.

 

This was first published in March 2013

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