Distributorship Agreement Checklist

Distributorship Agreement Checklist

Written by Steve Sidkin
25 June 04

1. Parties

• state clearly the identity of the parties. If a company, state the place of incorporation, registered/principal office and any registered number.
• are the obligations of the distributor to be guaranteed?

2. Definition

• the Territory covered by the Agreement.
• the products the subject of the Agreement.

3. Scope of Appointment

• is the distributorship exclusive/sole/non-exclusive?

4. Duration of the Agreement

• any initial minimum period.
• right to renew/automatic renewal.
• right to terminate by notice.

5. Terms of Sale of Products from Supplier to Distributor

• supplier’s right to refuse orders.
• prices, provisions for fixing prices, provisions in the event of failure to fix prices.
• pricing provisions on resale (subject to local law).
• terms of payment/means of payment (e.g. letter of credit).
• distributor to purchase “products” only from the supplier.
• supplier’s conditions of sale to apply.
• delivery terms (ex works, CIF, FOB, etc.).
• reservation of title.
• Warranties.
• limitation of liability.
• supplier’s right to improve or modify the “products”.
• distributor’s obligation to purchase annual minimum quantities of “products” and consequences of failure (termination/change of scope of appointment).

6. General Obligations on Distributor

• to promote sales.
• not to deal in competing products during the Agreement.
• not outside the “Territory” and in relation to “products” to seek purchasers, establish any branch or maintain any distribution depot.
• to maintain offices and other facilities (for sales, service, repair, parts, etc.).
• to pass back to the supplier market information and provide reports and returns.
• to keep accounts and records, and allow the supplier to inspect and audit.
• to comply with local laws.
• not to alter or change “products” or packaging.
• to conform to the supplier’s marketing policies.
• to keep sufficient stocks of the “products” and of parts.
• to maintain sufficient qualified staff.
• qualifications for appointment of local dealers.

7. Advertising

• minimum advertising commitment on distributor.
• form and content of advertising to be approved by supplier.
• supplier to provide certain promotional literature free of charge.

8. Intellectual Property Rights

• all rights to Trade Marks remain with supplier.
• distributor not to endanger application for registration/ registration of Trade Marks.
• control of prosecution/defence of infringement proceedings and sharing of spoils/liabilities.

9. Technical Support and Confidentiality

• supplier to provide know-how, technical support and training.
• obligation of confidentiality upon distributor in respect of know-how disclosed.
• confidentiality obligation to continue after the termination of the Agreement.

10. Reservations of the Supplier

11. The Supplier’s Right to terminate the Agreement

• on breach by the distributor.
• on failure by the distributor to achieve sales targets.
• on insolvency of the distributor.
• on change in control of distributor.
• on distributor’s being prevented from performing its duty.
• on distributor’s failing to purchase minimum quantities.
• on purported assignment by distributor.
• if the agreement becomes illegal.

12. Consequences of Termination

• rights and liabilities of the parties to survive the termination.
• resale of merchantable stocks to supplier.
• destruction of all other stocks.
• distributor to cease use of Trade Marks.
• distributor to supply customer lists.

13. General Provisions

14. Choice of Law, Submission to the Jurisdiction and Address for Service

This briefing note is for general information. For advice in applying this general information to your specific circumstances, please contact Stephen Sidkin or any members of the Fox Williams’ agentlaw team. (www.agentlaw.co.uk).