DISTRIBUTOR AGREEMENT #1

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Distributor Agreement #1

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.

 

This Distributor Agreement #1  is – 9 pages long.  Includes GST

 

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DISTRIBUTOR AGREEMENT
When a distributor buys goods from a manufacturer

A distributor agreement is a legal contract between a manufacturer and a distributor outlining the terms and conditions under which the distributor is authorised to purchase, resell, and market the manufacturer’s goods. This agreement helps to ensure a clear understanding of each party’s responsibilities and expectations.

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

Distributorship is distinct from agency, licensing, franchising, cooperatives and multi-level marketing but may share elements of these.  Although a clear distinction can be drawn between distribution and franchising, consider whether the relationship may be deemed a franchise or pyramid selling.

Distributor contracts involve concern agents or principals overseas.  Such contracts may include terms from Incoterms.  ‘Incoterms’ refers to the collection of essential international commercial and trade terms.  The terms were devised in recognition of non-uniform standard trade usages between various States.  When incorporated into a contract, the Incoterm code provides a detailed interpretation of rights and obligations between parties.

Incoterms do not possess legal status.  They are standardised and published, available for incorporation into international contracts at the parties’ discretion.  Parties should specifically refer to the Incoterms in the contract to indicate incorporation.  The International Chamber of Commerce (ICC) is responsible for revising Incoterms periodically to reflect changing practices in international trade. Explanations of these terms and their abbreviations (e.g. EXW and FOB) can be found on the website of the International Chamber Of Commerce.

 

Key Components

Key Components of a Distributor Agreement

  1. Parties Involved: Identification of the manufacturer and the distributor.

  2. Scope of Agreement: A clear description of the products being distributed, the territory covered, and the duration of the agreement.

  3. Purchase Terms: Details on how the distributor will purchase goods from the manufacturer, including pricing, payment terms, minimum purchase requirements, and order procedures.

  4. Distribution Rights: Specifies whether the distribution rights are exclusive or non-exclusive, and outlines any limitations on the distributor’s rights to sell the products.

  5. Marketing and Promotion: Expectations for how the distributor will market and promote the products, including any specific marketing efforts required by the manufacturer.

  6. Delivery and Logistics: Details on how products will be delivered, including shipping terms, risk of loss, and responsibilities for shipping costs.

  7. Pricing and Payment: Terms regarding pricing, discounts, payment methods, credit terms, and penalties for late payments.

  8. Performance Metrics: Any performance metrics or sales targets the distributor is expected to meet.

  9. Intellectual Property: Provisions regarding the use of the manufacturer’s trademarks, logos, and other intellectual property.

  10. Confidentiality: Agreement that the distributor will keep certain information confidential, such as pricing, product specifications, and marketing strategies.

  11. Termination: Conditions under which the agreement can be terminated by either party, including breach of contract, failure to meet sales targets, or mutual agreement.

  12. Warranties and Liability: Warranties provided by the manufacturer for the products and limitations of liability for both parties.

  13. Dispute Resolution: Provisions for resolving disputes, such as mediation or arbitration, and the governing law for the agreement.

  14. Miscellaneous: Other terms such as force majeure, amendments, assignment, and notices.

 

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