Quick Answer: What Is Sole Distributor Agreement?

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;
  • performance;
  • reporting; and.
  • circumstances under which the contract may be terminated.

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.