Distribution Agreement: Format and Example

A distribution agreement is a legal contract between a manufacturer or supplier and a distributor that outlines the terms and conditions governing the distribution and sale of products. The distribution agreement should clearly define the territory or market in which the distributor is authorized to distribute the products, as well as the specific products covered by the agreement. The supplier’s obligations regarding product supply, including manufacturing, quality control, packaging, and delivery, should be outlined.

Key Takeaways:

• The distributor’s obligations regarding product supply, including manufacturing, quality control, packaging, and delivery, should be outlined.
• The distributor’s responsibilities for marketing, promoting, and selling the products within the designated territory should be described.
• The duration of the agreement, including the initial term and any provisions for renewal or termination, should be defined.

Distribution Agreement Format

Characteristics of Distribution Agreement

1. Appointment and Scope: Distribution agreements typically appoint the distributor as the authorized representative to distribute the supplier’s products within a specified territory or market.

2. Supplier Obligations: The supplier agrees to provide the distributor with the products to be distributed in accordance with the terms and conditions of the agreement. This includes manufacturing, packaging, and delivering the products to the distributor as per the agreed-upon specifications, pricing, and terms.

3. Distributor Obligations: The distributor agrees to market, promote, and sell the supplier’s products within the designated territory or market. Distributor obligations may include maintaining sufficient inventory levels, meeting minimum sales targets, providing customer support, and complying with any branding or marketing guidelines provided by the supplier.

4. Term and Termination: Distribution agreements specify the duration of the agreement, including the initial term and any provisions for renewal or termination.

5. Intellectual Property Rights: Distribution agreements address ownership and use of intellectual property associated with the products, including trademarks, logos, and proprietary information. The agreement may include provisions for the distributor’s use of the supplier’s intellectual property solely for the purpose of promoting and selling the products.

Example of Distribution Agreement

Distribution Agreement – FAQs

What are the major details to be included before finalizing the distribution agreement?

• Party details
• Description of products
• Territorial rights and restrictions
• Terms of supply
• Quality standards and compliance
• Pricing and payment terms
• Marketing and advertising
• Term and termination

What are the purposes of distribution agreements?

Clear expectations: The distribution agreement specifies what is expected of both the supplier and the distributor. This transparency leads to a smoother operating relationship.

Dispute avoidance: If problems emerge, the agreement may be used as a reference point, preventing small concerns from turning into large ones.

Territory protection: The contract might designate areas for the distributor, granting them exclusive rights to sell in specific locations.

What is a Service Distribution Agreement?

This is similar to a product distribution agreement, except that instead of a product, a distributor is granted the right to sell services to clients in a certain region or channel. The distributor operates as an agent or middleman between the supplier and the client, enabling service delivery and payment collection.

What is a warranty clause?

The maker must guarantee that the items are merchandisable and suitable for sale. Any item with manufacturing defects or other flaws will be replaced by the manufacturer. The producer also guarantees that the items will arrive at their destination on schedule.

What is the difference between a distributorship agreement and a franchise agreement in India?

The franchise agreement authorizes and encourages the franchisee to use the franchisor’s trademarks and brand name in the course of conducting business as usual. Under a distributorship agreement, a distributor is not permitted to use the company’s trademarked name in connection with the distribution of its products. Instead, the wholesaler operates under its own identity. It serves as a distributor but does not represent the company in any manner.