A distribution agreement should firstly deal with the appointment of the distributor and the terms of the appointment. Is the distributor to be granted an exclusive right to distribute the goods in a reserved area and should the distributor be allowed to distribute the goods outside this area? Both considerations will have to be considered in the light of competition law provisions.
The agreement may be used to control the channels within which the distributor can operate. For instance, should the distributor be able to supply the products over the internet or make further wholesale supplies?
"White labelling" whereby the distributor receives the products and resupplies them under its own brand or the brand of another business, is also an arrangement that can be dealt with in such an agreement.
The agreement should also deal with the respective duties of the distributor and the supplier. Who is to advertise the product; will there be any sales targets; how is stock to be held and ordered?
Of crucial consideration will be the terms of payment and the passing of the title of the goods. Is title to be passed on delivery or only once the distributor has paid for the goods? Is the supplier to be granted the means to re-obtain the stock should the distributor delay payment?
A member of our specialist Business Law team can provide specialist advice as to content of your distribution agreement.
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