Q&A

Question: What key terms are in a distribution agreement?

The distribution agreement will cover three main things.

First, whether the appointment is exclusive. If it is exclusive, the distributor is the sole distributor of the goods in the allocated distribution area.

Secondly, it will cover procedures. For example, payment terms may consider when the distributor can expect to be paid by the manufacturer.

Lastly, it will cover some restrictions. For example, the manufacturer may wish to restrict the distributor from selling similar goods. Other key terms that the distribution agreement will cover are the price for the goods, the distribution area for the distributor and the terms for termination.