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This Distribution Agreement allows the Distributor to purchase products for his own account and then resells them to his customers in his territory. The Distributor earns profit margin between the prices. The Agreement is drafted in favour of the Company.
The Company wishes to extend the area in which sales are made to a new territory. The Distributor and is willing to distribute for the products in the Territory. The Company has agreed to appoint Distributor for an initial term as its distributor of Products for certain applications in the Territory. The Distributor may also markets/manufactures/distributes various products, but these do not compete with the Company's products and, prior to the discussions with the Company leading to this Agreement, had neither the capacity nor the intention to distribute any products competing with the Company's products.
The Distributor shall: (a) vigorously promote the Products in the Territory, such promotion to include demonstration and advertising of the Products at Distributor’s own expense; (b) act diligently and use its best endeavours to maximise sales of the Products; (c) provide a prompt and efficient after sales service for customers to whom it has sold Products in the Territory at its own cost; (d) comply with the Company's reasonable instructions and act beneficially and loyally to the Company and shall not do anything to prejudice the sale of Products in the Territory; (e) conduct its business in a responsible and ethical manner and in accordance with all laws applicable to the Territory and at its own expense obtain all necessary permits, consents and licences to enter this Agreement and perform its duties within the Territory; (f) maintain an adequate number of qualified staff to enable it promptly and efficiently to perform its obligations; (g) submit such business plans, marketing information and sales forecasts, reports and other such information as the Company shall from time to time require; (h) participate as requested in the Company's promotional and training activities; (i) notify the Company of any invention or improvement it may make relating to any Products and promptly enter into negotiations in good faith to transfer all rights to the invention or improvement to the Company on such terms as may be agreed; (j) keep the Company informed of any complaint or dispute concerning Products supplied by the Distributor; (k) obtain the Company's written approval before issuing any advertisement or publicity for Products in the Territory other than those directly provided by the Company; (l) ensure that the Products are installed and used in conformity with the Company's technical handbook/instruction manual as from time to time amended; (m) not make any modification to any of the Products save as the Company may from time to time authorise in writing.
How to use this document?
This document should be carefully read by the Company and the Distributor.
The parties should sign and return a copy, and once signed, both parties should get a copy. To avoid any future disputes, both parties may wish to have their signature witnessed.
The Territory, Product, and Nature of product (e.g. exclusive?) should be clearly stated in the document.
If either party wished to amend the agreement in the future, both parties should agree to do so, and the original agreement and amendments should be recorded in writing and signed by both parties.