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Distribution Agreement

A Distribution Agreement is a contract that sets out the terms and conditions of the distribution arrangement between a manufacturer or supplier of a product (‘Supplier’) and an overseas distributor that wants to purchase the Supplier’s goods to sell (‘Distributor’).
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Document Overview

This is a useful tool that identifies each party’s rights and obligations under the agreement with the option of giving sole or exclusive rights to the distributor.

Important considerations

Since the agreement involves dealings with international markets, the document should be customised to incorporate the requirements of each party with the awareness that there is no uniform regulations or law around the world.

This document should only be used for the appointment of a distributor, as it excludes the creation of agency or partnership relationships. Therefore, it is important to be aware of the difference between distribution and agency. 

Difference between distribution and agency

Agency involves a person called ‘agent’, who usually acts as a representative of the supplied goods. Agents do not take ownership of your goods and are generally paid a commission based on the sales generated. Therefore, the supplier as the principal has more control over the way the agents operate, for example settling on the sale price.

Distribution, on the other hand, involves a ‘distributor’, who buys the products and resells them in their own right for their own profit.

Use this Distribution Agreement document if:

  • You are a manufacturer or supplier that wants to export products by way of distributorship appointment

  • You are a manufacturer or supplier that wants to develop a distribution network.

  • You are a distributor who wants to purchase overseas product to sell in your country

What does this Distribution Agreement document cover?

  • Interpretation

  • Grant exclusive rights

  • Period

  • Placing of orders: prices

  • Passing of property and tie for payment

  • Place of and currency for payment

  • Duties of distributors

  • Duties of company

  • Rights of company

  • Return of company property and disposal of stocks

  • Cancellation of agreement

  • Non-disclosure of company affairs

  • Employment of agents

  • Liability for acts of distributors

  • Acts of associates

  • No partnership or agency created

  • Arbitration

  • Application of law

  • Authentic text

  • Cancellations of previous agreements

  • Implied terms

  • Service of notices

Further Information:

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