DISTRIBUTOR AGREEMENT

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At a Glance

When a distributor buys goods from a manufacturer

A distributorship (or dealership) is an agreement between two independent parties, the vendor and distributor.

When a distributor buys goods from a manufacturer to a specified net value, and a specified range. Manufacturer agrees to give distributor rebates, discounts. Rules for dispatch, payment, no assignment by distributor, maintenance of stock.

The distributor has a contract to stock the vendor’s product. The distributor will usually be required by the vendor to hold adequate stock and maintain their outlet premises and infrastructure in a way that will reflect well on the vendor’s product. The distributor’s profit arises from the difference between the price at which they pay for the goods and the price at which they are able to sell the goods.

Distributor Agreement

This Distributor Agreement template defines the legal framework for appointing a distributor and governs the rights and obligations of both parties in a distribution relationship.

Period & Supply of Products

The agreement specifies the term of the arrangement, minimum purchase commitments, and how substitute products are handled when models are discontinued.

Orders, Prices & Discounts

Distributors place orders under the supplier’s pricing schedule, with provisions for discounts, rebates, and volume incentives.

Payment & Dispatch

The distributor pays within a set timeframe (e.g. 30 days) and the supplier arranges dispatch in accordance with agreed logistics.

Resale & Conditions of Sale

Distributors must resell products as provided, without altering branding, and comply with any sales conditions or restrictions.

Relationship Between Parties

The distributor is an independent contractor — not an agent or partner. The agreement clarifies that the distributor cannot bind the supplier.

Stock Maintenance & Delays

Distributors are required to maintain sufficient stock for display, demonstration, and spare parts. Limits on liability for delivery delays are included.

Termination & Assignment

Either party may terminate after the initial term with notice. Immediate termination is permitted for material breaches or insolvency. Assignment requires prior consent.

Sub-Distributors & Agents

Distributors may appoint sub-distributors only with supplier approval, while remaining liable for their actions.

Arbitration & Notices

Disputes may go to arbitration under defined law. Notices must be in writing and served by hand, mail, email, or other agreed methods, with rules on timing.