Not sure what you should be putting in your distributor agreement? Here is LegalVision’s distributor agreement checklist:

  • Have you identified the parties?
  • Have you described the agreement?
  • Have you appointed a distributor?
  • Is the appointment exclusive or non-exclusive?
  • Do you need to include sub-distribution rights for the distributor?
  • Have you identified adequately and precisely the designated territory and markets?
  • Does the distribution agreement have a term with renewal options?
  • Does the distribution agreement have termination rights and procedures?
  • Does the distribution agreement adequately describe the products or goods and services which will be distributed?
  • Are these items adequately particularised?
  • Are pricing terms fully covered – including discounts and change notices?
  • Does the distribution agreement cover payment terms? Such as due dates, currency and credit terms?
  • Does the distribution agreement set quantifiable performance targets, deadlines, quotes and remedies?
  • Have you covered liability issues and risk allocation?
  • What about shipping procedures and ordering?
  • Does the distribution agreement specify the obligations of the distributor? Do these obligations match up with relevant legal obligations?
  • Are the obligations of the supplier clearly specified? Such as support, training, advertising, quality controls, sales leads, samples and marketing?
  • Does your distributor agreement comply with various relevant regulatory regimes which are specific to your industry?
  • Have you mentioned warranty and after-product care? This should include a policy on defective goods and services.
  • You should include a term relating to changes in price products.
  • Your distribution agreement needs to include a term which relates to new products and whether or not a distributor has a first right of refusal to distribute new products.
  • What happens if the distributor wants to distribute competing products?
  • Your distribution agreement needs to cover intellectual property issues such as trademarks, copyrights, confidential information, licensing, assignment, sub-licencing and remedies for breach.
  • Termination is a huge issue you should cover. Do you need a “termination for convenience” or “termination for cause” provision?
  • Explain what notice requirements and procedures need to be met to terminate the distribution agreement.
  • Explain the general confidentiality terms of the distribution agreement.
  • Include non-competition and non-solicitation clauses.
  • Your distribution agreement should cover any events which may lead to the end of the agreement which are outside the control of either party.
  • Your distribution agreement needs to cover issues of negligence, liability and indemnification in a clear and detailed manner.
  • After-termination procedures and rights.
  • Your distribution agreement should always have a dispute resolution clause which outlines how disputes will be dealt with when they arise – alternative dispute resolution is always a good idea.

Conclusion

A distribution agreement should be flexible, fair and reflect your general business practices. Hence, adding clauses which allow for the agreement to be changed when circumstances change is crucial to the success of your distributor agreement. You should always consider speaking to a contract lawyer, a business lawyer or getting online legal advice when you are drawing up a distributor agreement.

Lachlan McKnight

Next Steps

If you would like further information on any of the topics mentioned in this article, please get in touch using the form on this page.