Distribution Agreements I
Nature of Agreement
The agreement should define its character as an exclusive distributorship, sole distributorship or non-exclusive distributorship. This will be reflected by the presence or absence of clauses which provide for exclusivity and other key rights and obligations.
Appointment
The supplier appoints the distributor as its exclusive or non-exclusive distributor to distribute the relevant goods and/ or services in the relevant territory. The right be may be the exclusive right to import and distribute.
Product and Territory
The agreement will specify the goods concerned. It may refer only to certain types of goods or to a range of products. The agreement may allow for extensions to new kinds of related goods.
Duration
The term / duration of the agreement is a matter for commercial agreement. There may be an initial trial period with break clauses, if minimum sales are not achieved.
Pricing
The distributor’s profit is the difference between the selling price and the purchase price. He does not earn a commission. The distribution agreement may contain provisions in relation to the price which the distributor must pay when ordering the goods and/or services.
Distributor’s undertakings
The terms of the distributor’s obligations to the supplier are determined by the circumstances and the commercial terms which are reflected in the agreement.
Supply of products
The agreement is likely to provide for the physical supply of the relevant goods. It may be provided that the distributor may notify the supplier in writing of its forecast of the quantities of each type of goods that it expects to buy for delivery during the ensuing period, by a certain date before.
Supplier’s undertakings
The terms of the supplier’s obligations to the distributor are determined by the circumstances and the commercial terms which are reflected in the agreement.