Distribution agreements define the terms and conditions under which a distributor may sell products provided by a supplier. Such an agreement may be for a limited term, and be further restricted by territory and distribution channel.
The agreement is usually between a manufacturer or vendor and a distributor. The basic elements of a distribution agreement include the term (time period for which the contract is in effect), terms and conditions of supply, and the sales territories covered by the agreement
The manufacturer or vendor must also determine whether the distribution agreement will be exclusive or non-exclusive. In an exclusive agreement, the specified distributor will be the sole distributor with the right to sell the product within a particular geographic region or within multiple regions. If the arrangement is non-exclusive, the manufacturer or vendor may supply other distributors. The manufacturer or vendor must decide also on a distribution strategy when considering what type of agreements to enter.
Distribution agreements may be international in scope to operate subsidiaries in a number of countries for wide geographical coverage.
Following is a checklist of factors to be considered when drafting a distribution contract:
- Terms and conditions of sale.
- Term for which the contract is in effect.
- Marketing rights.
- Trademark licensing.
- The geographical territory covered by the agreement.
- Circumstances under which the contract may be terminated.
Following are some Important kinds of Distribution Agreements
- Consignment Agreement
- Deal Letter
- Exclusivity Agreement
- License Agreement
- Manufacturing Contract
- Manufacturing Lease
- Manufacturing License Agreement
- Process Agreement
- Product Agreement
- Product Distribution Agreement
- Purchase Order
- Retailer Agreement
- Sales Agreement
- Subscription Agreement
- Supplier Agreement
- Warranty Agreement