Le Intelligensia

What is a Distributor Agreement


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How to draft a Distributor Agreement

The major duty of a Manufacturer ends when a product is manufactured and ready for distribution. From that moment it is the duty of the Distributor to take the product till it reaches the end user. This distributor acts as a bridge between the customer and the manufacturer.

Who is a distributor

The distributor is the one who is appointed by the Manufacturer to distribute to products that are manufactured. There is a very big supply chain involved in carrying the product from manufacturer to the end user and the distributor is at the frist position in the supply chain.

Problems that may arise between the Manufacturer and Distributor
  • When the Distributor distributes the competitor’s products
  • When the Distributor resigns from Distributorship without any prior notice
  • If the distributor is not performing up to the expected level
  • If the Distributor doesn’t hold sufficient stock
  • In these situations, the Manufacturer may face a big difficulty and loss because of the act of the Distributor. To avoid any such loss, it is advisable to enter into a distributor agreement.

    What is a Distributor Agreement

    While appointing a Distributor, the manufacturer might have communicated plenty of conditions to the Distributor and when these conditions are written as a piece of contract, it is called a Distributor Agreement.

    Important points in a Distributor Agreement
    1. Parties to the contract
    2. The subject matter (list of Products) to be mentioned
    3. Conditions for selling the product
    4. Exclusive/non-exclusive
    5. Payment terms
    6. Commissions
    7. Performance
    8. Marketing Rights
    9. Term of the Agreement
    10. Termination clause
    11. ...more
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      Le IntelligensiaBy Arivazhagan