Home News The importance of a well-written distribution agreement The rest of this section contains model distribution agreements ranging from very short contracts to more complex ones. In our experience, the most typical agreement is a four-page memory agreement that is made on 11 x 17 papers, so the complete agreement is included on a single sheet. Printing is usually easy to read – with quite a large handwriting, contrary to what you might see on an order or agreement with terms of sale. A distribution contract is a commercial contract between a supplier of goods and a trader of goods. The supplier can be a manufacturer or reseller of the products. Like other commercial agreements, it is essential that an international distribution agreement clearly identifies the responsibilities of each party. The supplier and distributor must be clear about their obligations, which must be fulfilled in accordance with the conditions of the transaction. The agreement should also set the duration of the business relationship. In addition, procedures should be put in place to address issues related to extension and termination. Remember your intellectual property: if you appoint a distributor, you also grant a license to use your intellectual property for distribution. You basically give them access to your most sensitive assets.
It is allowed to use your domain name, logo and trademarks. If these issues are not explicitly addressed in the agreement, it can lead to situations where your trader takes possession of your intellectual property and effectively locks you out of the area. A distribution agreement regulates the relationship between suppliers or manufacturers and distributors. Suppliers or manufacturers use these distributors to sell their products at the retail or wholesale level. It is therefore essential for both parties to consider and understand the main terms of a distribution agreement. These conditions may vary depending on the specific agreement between the parties. Sometimes the distribution agreement indicates the responsibilities of the distributor either in terms of objectives, quotas, or in terms of necessary purchases. There are pros and cons to any way to say it anyway. We believe the key lies in the fact that manufacturers and distributors set a pleasant “goal” for both parties. This makes it more likely that the goal will be achieved, as it generates mutual commitment and interest. In many exclusive agreements, suppliers or wholesalers may require the distributor to maintain a level of performance. Their performance can be achieved on the basis of revenue targets or minimum orders.
These clauses help to ensure the justification of exclusive distribution agreements. A minimum or minimum clause also codifies the possibility of appointing additional dealers for a given sector if a trader does not operate in accordance with the standard. Minimum standards should ideally be established before both parties conclude the distribution agreement. The prior setting of standards ensures that both parties are aware of the obligations and requirements they must meet. The best distribution agreements allow for termination of the business and termination for convenience. If an agreement allows termination for convenience, a partner who wishes to detach from the agreement gives the other partner 30 days` notice. If the convenience clause is invoked, it is not necessary to argue the cause and responsibility of the cause. Most importantly, the distribution contract doesn`t end in a legal skirmish.