A distributor agreement is a contractual agreement in which a distributor — also referred to as a distribution company — agrees to distribute the products it purchases from a supplier or manufacturer.
A sole distributor agreement is one in which the manufacturer sells exclusively to one distributor.
What is a sole distributor?
A sole distributor is the only distributor of the supplier’s product in a defined territory. An exclusive distributor is the only one to sell the supplier’s product in a defined territory. As such, the difference is that if a distributor is exclusive, the supplier can’t sell directly to customers in the territory.
What is a distributor agreement?
A distribution agreement is a legal agreement between a supplier of goods and a distributor of goods. The supplier may be a manufacturer, or may itself be a distributor reselling another’s goods.
What should a distribution agreement include?
Typical elements of a distributor agreement
- terms and conditions of sale;
- term for which the contract is in effect;
- marketing rights;
- trademark licensing;
- geographical territory covered by the agreement;
- reporting; and.
- circumstances under which the contract may be terminated.
Are exclusive distribution agreements legal?
Distribution agreements, particularly those with exclusivity, often contain non-compete provisions. Such provisions can be allowed under the Verticals Regulation but again there are limitations, depending on the circumstances.