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 with guarantee from Distributor's Parent.
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The Distribution of Products Agreement is a legal document that establishes a contractual relationship between three parties: the company, the distributor, and the guarantor. The document outlines the terms and conditions under which the distributor will distribute the company's products in a specific territory.
The importance of this agreement lies in its ability to clearly define the rights and responsibilities of each party involved. By establishing an exclusive distributorship, the company ensures that its products are being distributed by a trusted partner who has the necessary resources and expertise to effectively market and sell the products in the designated territory.
The agreement begins with an interpretation section, which defines key terms used throughout the document. This section ensures that both parties have a clear understanding of the terminology used in the agreement.
The appointment and term section outlines the duration of the agreement and the exclusivity of the distributorship. It specifies that the distributor is appointed as the exclusive distributor for the company's products in the territory for a specified initial term. The agreement will continue in full force and effect unless terminated by either party with a written notice.
The purchase of products section states that the distributor is required to purchase its entire requirements for products from the company. The distributor must comply with the company's terms of sale and pay the distributor list price for the products. The section also clarifies that the distributor's individual purchase orders or any other documents issued by the distributor are not applicable to the sale of products, and the terms of the agreement prevail.
The sale of products section outlines the distributor's responsibilities in selling the products. The distributor is required to sell the products on its own behalf, publicize and promote the products in the territory, and provide after-sales service to customers. The section also prohibits the distributor from advertising, canvassing, or seeking orders for products outside the territory.
The agreement includes provisions for pricing, payment, delivery, and warranty. It specifies that the distributor must pay for the products within a specified timeframe and that the company will arrange for the delivery of the products. The company also provides a warranty for defective products and outlines the process for returning and replacing such products.
The agreement includes clauses related to confidentiality, intellectual property, liability, termination, force majeure, and general provisions. These clauses ensure that both parties understand their obligations and rights under the agreement and provide a framework for resolving any disputes that may arise.
Overall, the Distribution of Products Agreement is a crucial document that establishes a legal framework for the distribution of the company's products in a specific territory. It protects the interests of both parties and ensures that the distribution process is carried out in a fair and efficient manner.
1. Provide information: Enter the names and addresses of the company, distributor, and guarantor in the agreement. This ensures that all parties are clearly identified.
2. Specify territory and products: Clearly define the geographical area (territory) in which the distributor is authorized to distribute the products. List the specific products that the distributor will be distributing.
3. Establish exclusivity: Specify that the distributor is appointed as the exclusive distributor for the company's products in the territory. This ensures that the distributor has the sole right to distribute the products in that area.
4. Define purchase terms: Clarify that the distributor is required to purchase all its product requirements from the company and must comply with the company's terms of sale. Specify the distributor list price for the products.
5. Outline distributor's responsibilities: Clearly state the distributor's obligations, including selling the products on its own behalf, promoting the products in the territory, and providing after-sales service to customers.
6. Set pricing and payment terms: Specify the payment terms, including the timeframe for payment and any applicable interest for late payment. Clarify that the prices listed in the company's price lists do not include any applicable taxes.
7. Arrange for product delivery: State that the company will arrange for the delivery of the products to the distributor. Clarify that delivery dates and times are estimates and not binding.
8. Provide warranty for defective products: Outline the process for returning and replacing defective products. Specify that the distributor must promptly inform the company of any defects and return the products within a specified timeframe.
9. Address confidentiality and intellectual property: Include clauses that protect the confidentiality of information shared between the parties and outline the distributor's rights and responsibilities regarding the company's intellectual property.
10. Define liability and termination: Clarify the liability of each party and the circumstances under which the agreement can be terminated. Specify the consequences of termination, such as the distributor ceasing to have distribution rights and the return of products.
11. Address force majeure: Include a clause that addresses the impact of unforeseen circumstances beyond the control of either party (force majeure) on the performance of the agreement.
12. Include general provisions: Include general provisions that cover topics such as assignment, waiver, notices, and the governing law of the agreement.
13. Seek legal advice: It is recommended to seek legal advice when drafting or entering into a Distribution of Products Agreement to ensure compliance with applicable laws and regulations.