Exclusive Distributorship Agreement Exclusive Distributorship Agreement Agreement made by pellcity27


An exclusivity agreement is a contract between two or more entities to deal only with each other regarding a specific area of business. It usually does not establish a relationship between two businesses, but rather takes it to the next level of commitment. An exclusivity agreement can also exist between two people in regard to some business intercourse they will endeavor upon together. The essential feature of an exclusivity agreement is the covenant to not engage in a particular business activity with other parties for a specified period of time. The agreement usually restricts only one of the parties. Exclusivity agreements create stability in a business relationship, which in turn provides predictability. The ability to foresee future costs and project business relationships is crucial to operating a large company. An exclusivity agreement shuts out competition, which tends to let costs stabilize and allows for a confident and efficient allocation of noncapital resources.

Exclusive dealing is not per se or presumptively illegal under either the Sherman Act, 15 U.S.C. �� 1-7, or the Clayton Act, 15 U.S.C. �� 12-27. Antitrust concerns related to exclusive dealing arrangements are based on the possibility that performance of the contract will foreclose competition in a substantial share of the line of commerce affected. To determine whether a particular exclusive arrangement operates as an illegal restraint on trade, courts generally apply the rule of reason test.

In Chicago Board of Trade v. United States, 246 U.S. 231 (1918), Justice Louis D. Brandeis listed some factors to be considered in applying the rule of reason: “the facts peculiar to the business to which the restraint is applied; its condition before and after the restraint was imposed; the nature of the restraint, and its effect, actual or probable. The history of the restraint, the evil believed to exist, the reason for adopting the particular remedy, the purpose or end sought to be attained, are al

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									                          Exclusive Distributorship Agreement

Agreement made on the (date), between (Name of Company), a corporation organized
and existing under the laws of the state of (name of state), with its principal office
located at (street address, city, state, zip code), referred to herein as Company, and
(Name of Distributor), a corporation organized and existing under the laws of the state
of (name of state), with its principal office located at (street address, city, state, zip
code), referred to herein as Distributor.

1.      Exclusive Appointment. Distributor is hereby appointed on an exclusive basis
for the sale of Company's (type of product) and other products in the territory composed
of (description of territory) for the period commencing on (date) and terminating on
(date). Company assumes no responsibility, however, with regard to any of its products
that may be shipped into Distributor's territory by others. Company furthermore reserves
the right to sell in the territory of Distributor any of its products or parts of products to the
United States, any state government, any department or bureau, and any contractor or

2.      Restrictions on Distributorship. Distributor agrees not to solicit or accept
orders for, or sell, or deliver, outside of the above-described territory, any merchandise
manufactured or sold by Company. Distributor will not sell, distribute, or promote the
sale of any line of products competitive to those supplied by Company either in such
territory or elsewhere.

3.    Compliance with Agreement. Distributor hereby accepts this appointment and
agrees to make all sales of Company's merchandise only in accordance with this

4.      Duties of Distributor. Distributor agrees to promote the sale of Company's
products in the above-described territory, to maintain a sales organization of sufficient
size to cover the territory and to serve the trade in the territory promptly and adequately,
to furnish to Company such reports, information, and data as Company may from time
to time require, and to conform to all merchandising policies of Company as may be
from time to time announced.

5.     Severability. The invalidity of any portion of this Agreement will not and shall
not be deemed to affect the validity of any other provision. If any provision of this
Agreement is held to be invalid, the parties agree that the remaining provisions shall be
deemed to be in full force and effect as if they had been executed by both parties
subsequent to the expungement of the invalid provision.

6.    No Waiver. The failure of either party to this Agreement to insist upon the
performance of any of the terms and conditions of this Agreement, or the waiver of any
breach of any of the terms and conditions of this Agreement, shall not be constru
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