Distribution Agreements III
Intellectual Property
A distribution agreement will usually contain clauses which protect the supplier’s intellectual property so as to prevent the distributor from building up a competing brand or taking goodwill during the agreement or afterwards.
IP Clauses
The supplier grants to the distributor a right (exclusive or non-exclusive), in the territory, to use the suppliers’ trademarks and other intellectual property in the promotion, advertisement and sale of the goods and/ or services for the duration of the agreement.
Confidentiality
There will usually be clauses which protect commercial secrets and other confidential information. Each party may undertake that it shall not at any time during this agreement and for a specified period of years after termination of the agreement, disclose to any person any confidential information concerning the business, affairs, customers, clients or suppliers of the other party or of any member of the group of companies to which the other party belongs.
Indemnity for Claims
The distributor may receive an indemnity from the supplier in respect of product liability claims. There may be obligations on the supplier regarding product recalls and defects.
Termination
The supplier or distributor, as the case may be, may have rights to terminate the agreement, if
- there is a material change in the control of the distributor;
- breach of intellectual property rights;
- un-remedied material breaches,
- termination of the term.
- insolvency of another party
Breaches may be deemed material and allow the other party to terminate if they are serious or persistent.
Termination Issues
Provision will be made for the termination of the agreement, whether by the expiry of the term, by notice or by reason of fault. The procedure on termination of the agreement may be provided.
Assignment Prohibited
The agreement is usually personal to the parties.
Law and Jurisdiction
The agreement and any dispute or claim arising out of it are commonly governed by and construed in accordance with the specified law. Similarly, the parties specify a jurisdiction which has exclusive to settle any dispute or claim that arises out of or in connection with the agreement.