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The Distribution Agreement (with Sub-Distribution Rights) is a crucial document that establishes a legal relationship between two parties: the company and the distributor. This agreement outlines the terms and conditions under which the distributor is appointed as the exclusive distributor of the company's products in a specific territory.
The document begins by highlighting the importance of extending sales to a new territory and the distributor's willingness to distribute the products listed in Schedule 1. It also mentions that the distributor does not compete with the company's products and had no intention to distribute any competing products before entering into discussions with the company.
The agreement is then divided into several sections, each addressing different aspects of the distribution relationship. The interpretation section defines key terms used throughout the agreement, such as business day, business plan, distribution rights, and intellectual property.
The appointment and term section states that the distributor is appointed as the exclusive distributor for an initial term and may distribute the products either directly or through sub-distributors. It also mentions the possibility of a worldwide distribution agreement with a multinational distributor.
The purchase of products section outlines the distributor's obligation to buy its entire requirements for products from the company and specifies the payment terms and order process. It also mentions the distributor's obligation to keep sufficient stock of products to meet customer requirements.
The sale of products section outlines the distributor's duties in promoting and selling the products, including advertising and providing after-sales service. It also mentions the distributor's obligation to comply with the company's instructions and not compete with the products.
The agreement also includes sections on confidentiality, intellectual property, liability, termination, force majeure, and general provisions.
Overall, this document is essential for establishing a clear and legally binding relationship between the company and the distributor, ensuring that both parties understand their rights and obligations.
To use this Distribution Agreement effectively, follow these steps:
1. Familiarize yourself with the entire agreement, paying close attention to the definitions and key terms in the interpretation section.
2. Ensure that all necessary information, such as the names and addresses of the parties, is accurately filled in throughout the agreement.
3. Review the products listed in Schedule 1 to confirm that they align with the intended distribution.
4. Determine whether the distributor will have the right to distribute products through sub-distributors, as mentioned in the appointment and term section.
5. Understand the payment terms and ensure that the distributor is aware of its obligation to purchase products from the company.
6. Familiarize yourself with the distributor's duties in promoting and selling the products, including any specific requirements for advertising and after-sales service.
7. Ensure that the distributor understands its obligations regarding confidentiality and intellectual property.
8. Review the liability section to understand the distributor's responsibilities in case of product defects or damages.
9. Familiarize yourself with the termination provisions and the circumstances under which the agreement may be terminated.
10. Understand the force majeure clause and its implications for both parties.
11. Keep a copy of the agreement for your records and make sure that both parties have signed it.
By following these steps, you can effectively use this Distribution Agreement to establish a successful distribution relationship with the distributor.