Importance of Distribution Agreement

Distribution agreements allow manufacturers and suppliers to interact well with their distributors. The distributors act as a bridge between the product manufacturers and their consumers. A distributor can sell the goods to consumers at a very high price or can get a commission for the processing of orders made by customers. Needless to say, distribution agreement is crucial for the sustainable relationship between a manufacturer and a supplier.

To ensure that the relationship you have with your distributor remains cordial and beneficial, you need to have a good distribution agreement that clearly summarizes the obligations between both parties. An experienced business lawyer can assist you in drafting an agreement that is both beneficial and fair to you and the other party.

Why Use a Distribution Agreement?

The relationship between distributors and manufacturers is symbiotic. With a distributor, you do not have to worry about the logistics of selling your products. On the other hand, the distributor obtains a product to sell without having to worry about production, research and development.

In order for this symbiotic agreement to continue smoothly, you and the distributor need to have a contract that protects the interests of both parties. This is where the importance of a good distribution agreement arises.

What are Distribution Agreements?

A distribution agreement is a legal document that defines the relationship that exists between you and your distributor. It addresses aspects such as supply requirements, scheduling, returns, inspection requirements and some other terms and conditions that define your relationship.

What Topics Should Be Included in My Distribution Agreement?

A distribution agreement can be exclusive or non-exclusive. If it is exclusive, it means that the distributor has control over the product line, sales channel and territory. In return, the supplier has to establish the performance obligations that the distributor must fulfill.

In your distribution agreement, you should cover issues such as:

  • The conditions of the contract
  • The territory of operation
  • Marketing rights
  • Information Obligations
  • General conditions of sale
  • Defects and credits of return
  • Registered trademark license
  • If the distributor can represent competing products
  • The conditions for the termination of your contract

How Can I Write a Good Distribution Agreement?

If you want to create a good distribution agreement, you have to deal with things like the payment method, where to distribute the products, the rights and responsibilities of the parties, and so on. You must also make sure that the agreement does not violate Florida’s competition laws.

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