A distribution agreement is a form of commercial contract that exists between the manufacturer/wholesaler/supplier of the goods and the distributor in a set geographical area. To improve the sales of their products, manufacturers collaborate with distributors that use varied marketing techniques and multiple platforms to sell their products.
The purpose of a distribution agreement is to prevent costly legal disputes and misunderstandings between suppliers and distributors. It clearly states the rights of both the parties and the profits they can make from the sale.
Each distribution agreement is unique for every supplier and distributor. Need help understanding a distribution agreement? Contact our team of experienced lawyers today.
Common clauses of a distribution agreement are:
The distribution agreements can vary from being simple to complex depending upon the goods on offer. It may also have variations in clauses depending upon the nature of the relationship.
Different companies use different types of distribution agreements. Choosing the right distribution agreement is very crucial because it outlines contractual obligations that protect the rights of suppliers and distributors. Here's a brief summary.
An exclusive distribution agreement is a type of agreement in which the supplier grants the distribution rights to a single distributor. In this case, the distributor becomes the sole authorized seller of the supplier’s products in a particular market or geographical area. Businesses that often engage in exclusive distribution agreements are high-tech electronics companies, car manufacturers, major appliance manufacturers, etc.
The wholesale distribution agreement is a type of agreement in which a wholesale company that produces products in bulk at cheaper rates collaborates with a distributor for the sale of its products. This type of agreement allows the distributor the freedom to become the sole owner of the products and sell it to a retail company or directly to the customers.
Distribution Agreement for Commissions is set in place to promote maximum sales and ensure benefits to both parties. Such agreements usually have a clause that states how much will the distributor be paid for meeting and exceeding a set sales requirement. This is a way for distributors to earn commissions for their hard work and be encouraged to sell more products.
Developer distribution agreements is an agreement between the developer of software and the distributor of the software. This outlines the legal bindings of their relationships, the profits and IP rights they are entitled to. Big names that engage in developer distribution agreements are Google and Amazon.
Distributors engaging in any type of trade with suppliers/ manufacturers/ wholesalers/ software companies/ appliance brands/ automotive companies/beauty product makers need a distribution agreement to establish the foundation of their business relationship, clarify legal liabilities, set certain rules and obligations.
Before negotiating and signing a distribution agreement, both parties should consult a qualified lawyer to protect their rights and avoid legal complications in the future.
EAGLEGATE Lawyers has a team of commercial lawyers with over ten years of industry experience. We have provided legal advice and professional insight for many businesses and helped them settle legal disputes in court. When it comes to distribution agreements, we can help our clients in many ways:
Want a well-drafted distribution agreement? Get in touch with us today and we’ll get started with the process. We will draft a contract after discussion with you to determine your desired outcomes. We ensure your business’ rights are protected under all circumstances.
Call us for a free initial consultation today.