Distributor Agreement – Essential for Manufacturers & Distributors
A Distributor Agreement is a legally structured document that outlines the terms under which a manufacturer sells products to a distributor for resale. This agreement helps both parties establish clear expectations regarding supply, pricing, distribution rights, and responsibilities. It serves as a crucial tool for businesses looking to expand their market presence through third-party distributors while ensuring contractual obligations are met.
Distributor Agreement
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.
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Why and When to Use a Distributor Agreement
A well-drafted Distributor Agreement establishes a clear legal relationship between a manufacturer and a distributor, ensuring the structured sale and resale of goods under agreed terms. This agreement helps manufacturers expand their market reach while providing distributors with exclusive or non-exclusive rights to sell products in designated territories.
This document is beneficial when:
- A manufacturer sells products to a distributor for resale to end customers.
- A distributor requires structured terms governing pricing, supply, and distribution rights.
- Both parties need to establish clear responsibilities regarding marketing, inventory, and logistics.
- Legal professionals require a standardised agreement for manufacturers and distributors to minimise risks and disputes.
- A company seeks to expand into new regions or markets through distribution partners.
A Distributor Agreement is a crucial document for defining the terms of engagement between manufacturers and distributors, ensuring both parties understand their rights, obligations, and responsibilities, reducing the risk of misunderstandings and legal disputes. It is particularly valuable for lawyers, corporate advisors, manufacturers, and distributors who need a structured and legally sound agreement.
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Distributorship Agreement is 9 pages and includes.
Period
Supply of products
Orders for products and prices
Discounts
Payment for products
Dispatch of products to distributors
Resale prices
Conditions for resale
Distributors not to tamper with products
Relationship between parties
Maintenance of stocks
Effect of delays in delivery
Distributors not to assign
Termination by notice
Summary termination of agreement by company
Termination on company ceasing to trade
Sub-distributors or agents
AND MORE…
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