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Distribution Agreement for Supplier

Key points and template

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Key Points Included in This Distribution Agreement for Supplier

Details of the distributed products
Exclusivity and non-competition arrangements
Geographical scope
Sales targets
Minimum purchase quantities
Conditions of purchase by the distributor, including price, payment terms, and warranty
Use of the supplier’s trademarks
Term and termination

Use This Distribution Agreement for Supplier if …

… you are the manufacturer or supplier of products and would like to expand your footprint into new markets or territories

… you would like to appoint an independent distributor with an established distribution network within a particular territory

What is a Distribution Agreement for Supplier?

Under a distribution agreement, a manufacturer or supplier of goods appoints an independent distributor to promote and sell its products in a particular geographical area.

The distributor undertakes to purchase the supplier’s products and re-sell them to its clients in this area, in its name and for its account.

As the distribution agreement primarily serves to expand sales, the supplier will be keen on including minimum purchase quantities, minimum sales targets, or minimum resale prices. These provisions are regularly scrutinized by anti-trust authorities because they can have the effect of restricting competition in the distribution area. Therefore, it is crucial to carefully draft these provisions to avoid any regulatory issues with the distribution of the products.

Also, there is increasing support in doctrine and case law for the principle of financial compensation in favor of the distributor for the customers it has acquired during the term of the agreement. Since the law is unclear on this subject, it is necessary to draft the provisions concerning the settlement of contractual relations carefully, to avoid any unpleasant surprises when the agreement comes to an end.