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Distributorship Agreement

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This is an agreement between an owner or manufacturer of a product and a distributor to distribute and sell the product. This document contains the material terms and conditions of the agreement including product pricing, a minimum sales quota, and the rate of commission. It includes numerous standard provisions that are commonly found in these types of agreements, and may be customized to address the specific needs of the parties. This document should be used when parties enter into a distributorship agreement.

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									This is an agreement between an owner or manufacturer of a product and a distributor
to distribute and sell the product. This document contains the material terms and
conditions of the agreement including product pricing, a minimum sales quota, and the
rate of commission. It includes numerous standard provisions that are commonly found
in these types of agreements, and may be customized to address the specific needs of
the parties. This document should be used when parties enter into a distributorship
                       DISTRIBUTORSHIP AGREEMENT

THIS AGREEMENT made effective on this ……………day of……………, 20…. (the
"Effective Date")
between……………………………., (the “Company”);

and ……………………………, (the “Distributor”).

In consideration of the promises hereinafter made by the parties hereto, it is agreed as follows:


The Company hereby appoints the Distributor as its exclusive Distributor in the territory (the
“Territory”) as described in Schedule A annexed to this Agreement, for selling the products
manufactured by the Company, as described on Schedule B attached hereto (the “Products”),
upon the terms and conditions as set forth herein.

2.      TERM

This agreement shall be effective on the Effective Date and shall remain in force for a period of
……………. Years thereafter.


(a) Either party may terminate this Agreement for substantial breach of any material provision
of this Agreement by the other, provided a notice has been given to the other specifying the
alleged breach and such other party has not cured the breach within __________ days.

(b) The Company may terminate this Agreement if:

     (i) there is an unacceptable change in the control or management of the Distributor;

     (ii) the Distributor ceases to function as a going concern or makes an assignment for the
          benefit of creditors;

     (iii) a petition for bankruptcy is filed by or against the Distributor, resulting in an
          adjudication of bankruptcy;

© Copyright 2011 Docstoc Inc.                                                               2
     (iv) if the Distributor fails to pay its debts as they become due, provided due notice has been
          given by the Company to the Distributor and the Distributor has not cured such breach
          within thirty (30) days thereof;

(c) Upon termination of this Agreement all further rights and obligations of the parties shall
cease, except that Distributor shall not be relieved of its obligation to pay any monies due as of
or after the date of termination.


(a) Distributor shall use its best efforts to promote the sale and distribution of the Products and
to provide adequate support, which efforts shall include the following:

     (i) Setting up and maintaining appropriate premises and facilities for the display and sales of
         the Products;

     (ii) Managing an adequate, trained sales and technical staff to promote the sale and provide
          support for the Products;

     (iii)Undertaking promotional and advertisement campaigns to encourage the sales of

     (iv) Provide Company with monthly forecast reports of requirements for the next six months
          for Products.

(b) Company shall, upon request, assist the Distributor with all advertising, sales promotion, and
public relations campaigns to be conducted, including providing Distributor with brochures,
pamphlets and other necessary documentation and shall also provide necessary technical
information and assistance.


The Distributor represents to the Company that it has available a showroom/outlet/warehouse
(the “Showroom”) and other existing infrastructure facilities which shall be utilized in marketing
and selling the Products during the term of this Agreement.

The Distributor shall be responsible for all rent and other expenses of such Showroom for the
purpose of its business. He shall at his own expense keep the Products at the Showroom insured
against all customary risks. Company will not be liable or responsible for the expenses relating to
or incidental to the Showroom.

6.      PRICES

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All prices stated are FOB the Company's offices in ____________________________. Prices do
not include any federal, state or local taxes applicable to the Products. An amount equal to the
appropriate taxes will be added to the invoice by the Company, if applicable. Distributor shall
pay such amount to the Company unless Distributor provides Company with a valid tax
exemption certificate authorized by the appropriate taxing authority. All transportation costs
shall be borne by the Distributor.


Company reserves the right, in its sole discretion, to change prices or discounts applicable to the
Products by giving written notice to Distributor of any price change at least _____ days prior to
the effective date of such change.


Payment terms are net cash upon delivery, except where satisfactory credit is established in
which case terms are net thirty (30) days from date of delivery. The Company reserves the right
to revoke any credit extended at the Company's sole discretion. Invoices not paid within thirty
(30) days of the invoice date will bear late payment interest at the rate of 1-1/2% per month from
the date of invoice until the date of payment.


Distributor shall use its best efforts to distribute the Products and to fully develop the market for
the Products within the Territory. The parties hereby agree that Distributor shall purchase and
distribute a minimum of _______ Products per ___________.


The Distributor shall purchase and maintain a minimum stock of ………… pieces each of the
Company’s Products to enable Distributor to perform its obligations hereunder, and such
quantity shall be reviewed every quarter in the light of the sales during the previous quarter,
demand, consumers preferences and market trends. All Products purchased by Distributor shall
be purchased solely for commercial resale or lease, excepting those Products reasonably required
by Distributor for advertising and demonstration purposes.

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Distributor shall order Product by written notice to the Company. Each order for Products issued
by Distributor to Company shall specify the delivery date, the description and quantity of
Products which are to be delivered on each of such dates.


Distributor may, at any time prior to the scheduled date of shipment, cancel any or all orders for
Products upon giving timely written notice and upon payment of the following cancellation
charges for each unit cancelled. The cancellation charges, intended as liquidated damages and
not penalties, are as follows:

0-5 days ____________% cancellation charges

5-15 days ____________% cancellation charges

15-30 days ____________% cancellation charges


All deliveries of Products sold by Company to Distributor pursuant to this Agreement shall be
made F.O.B. ___________________________ (the “Delivery Point”), and title to and risk of
loss of Products shall pass from Company to Distributor at the Delivery Point. Distributor shall
bear all costs of transportation and insurance and will promptly reimburse Company if Company
prepays or otherwise pays for such expenses.


Company shall not be in default by reason of any failure in its performance under this Agreement
if such failure results , whether directly or indirectly, from fire, explosion, strike, freight
embargo, Act of God, war, civil disturbance, material or labor shortage, transportation
contingencies, unusually severe weather, default of any other manufacturer, supplier or
subcontractor, quarantine, restriction, epidemic, or catastrophe, lack of timely instructions or
essential information from Distributor, or otherwise arises out of causes beyond the control of
the Company. Company shall not at any time be liable for any incidental, special or
consequential damages.


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Promptly upon the receipt of a shipment of Products, Distributor shall examine the shipment to
determine whether any Products are in short supply, defective or damaged. Within __________
days of receipt of the shipment, Distributor shall notify Company in writing of any such
shortages, defects or damage, which existed at the time of delivery. Within ______ days after the
receipt of such notice, Company will investigate such claims and deliver to Distributor Products
to replace any which Company determines were missing, defective or damaged at the time of
delivery. If Distributor fails to give notice as provided herein, Distributor shall be deemed to
have accepted such Products and to have waived all claims for shortages, defect or damage.


Company agrees, at its own expense, to indemnify, defend and hold harmless the Distributor, its
representatives and agents from and against every expense, damage, cost and loss (including
attorneys' fees incurred) resulting from a claim, suit or proceeding for infringement of any patent,
copyright or proprietary right, if Company is notified promptly of such claim in writing and
given authority, and full and proper information and assistance (at Company's expense) for the
defense of same.


The Distributor shall be entitled to a commission at the rate of ___________% of the net sale
price realized by it in retail outlets from sale of the Products. The term “net sale price” shall
mean the selling price of the Products, excluding any sales tax, local taxes and other levies
imposed upon the sale or purchase of the Products and/or on the total turnover, packing and
forwarding charges.

Company has the final discretion to evaluate the performance of the Distributor and all payments
to the Distributor are linked to its performance as per the targets that may be given by the
Company from time to time. In case the Distributor does not perform as per the targets set by the
Company, the Company may, in its own sole discretion, terminate the Distributorship without


All expenses incurred by the Distributor in connection with its performance of this Agreement
and its activities as agent for the Company, including but not limited to travel, automobile,
salaries and supplies, shall be borne by the Distributor and the Distributor shall be solely
responsible for the payment thereof.

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The status of the Distributor shall be that of an independent contractor and the Distributor shall
have no authority to assume or create any obligation whatsoever, expressed or implied, in the
name of the Company, nor to bind the Company in any manner whatsoever. The Distributor shall
not have any authority hereunder to enter into any contract of any kind on behalf of the
Company.. The Distributor undertakes and agrees that it will not furnish to any customer or
prospective customer any warranties, undertakings or guarantees of any nature whatsoever which
may create an obligation or liability of the Company. In the event that the Distributor does allow
or furnish to customers or prospective customers, such warranties, undertakings or guarantees
then, in such event, the Distributor shall indemnify and save the Company harmless from any
claims, demands, damages, costs or losses whatsoever arising out of or in any way connected
with such warranties, undertakings or guarantees.


The Distributor shall keep proper accounts of all Products received, sold, damaged and furnish to
the Company each week full particulars of the Products and shall permit the Company, and its
agents and servants, to inspect all books of account relating to the Products maintained in the
Showroom at all reasonable times.


Each party acknowledges that in the course of its obligations pursuant to this Agreement, it may
obtain certain confidential information, each party hereby agrees that all such confidential
information received by it, its parents, affiliates, subsidiaries, or Customers, whether before or
after the date of this Agreement, shall be kept in strict confidence and shall be used only for the
purposes of this Agreement, and shall not be disclosed without the prior written consent of the
other party.


Each party shall indemnify, defend and hold the other harmless from and against any and all
claims, actions, damages, demands, liabilities, costs and expenses, including reasonable
attorney’s fees and expenses, resulting from any act or omission of the acting party or its
employees under this Agreement, that causes or results in property damage, personal injury or


The Distributor shall insure the Products in its custody and control against all risks including but
not restricting to risks against riots, strike, hurricane, typhoon, and wilful damage. The Company

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shall not be liable to take back any Products that have been damaged due to the negligence or
carelessness of the Distributor.


The Distributor shall be liable for all compliance under any local laws and state government
rules and shall take all necessary steps for obtaining registrations, licenses and renewals thereof,
maintaining proper registers and also submitting necessary returns to the authorized agencies. In
the event of any contravention by the Distributor of the provisions thereof, the Distributor shall
remain fully liable and shall also keep the Company indemnified against any breach and
monetary liability or cost arising thereof.


The Distributor is free and entitled to appoint sub-Distributors, salesmen, commission agents
or other sales personnel on salary, commission or any other basis, but with the condition
that they will function in accordance with the provisions of this agreement and not do
anything which is detrimental to the interests of the Company, the Distributor, or the collective
interests of both.


This Agreement or the benefit therefrom shall not be assignable or transferable by the Distributor
in favor of anyone without prior written consent of the Company.

27.    NOTICES

All notices, correspondence, writings, statements or other communication required or permitted
to be given hereunder by either of the parties to the other of them shall be given, made or
communicated, as the case may be, by personally delivering the same, by telex, telegram or
electronic facsimile transfer, or by registered or certified mail, first-class, postage prepaid, return
receipt requested, addressed to the recipient as follows:






© Copyright 2011 Docstoc Inc.                                                                8

Both parties reserve the right to change the address of service at any time, with notice in writing
to the receiving party.


This Agreement shall be governed by the laws of the State of ______. The invalidity or
unenforceability of any provision of this Agreement shall not affect the validity or enforceability
of any other provision. Any controversies arising out of the terms of this Agreement or its
interpretation shall be settled in accordance with the rules of the American Arbitration
Association, and the judgment upon award may be entered in any court having jurisdiction


This Agreement constitutes the entire agreement of the parties with regard to the subject matter
hereof, and replaces and supersedes all other agreements or understandings, whether written or
oral. No amendment or extension of this Agreement shall be binding unless in writing and signed
by both parties.


This Agreement shall inure to the benefit of and be binding upon the parties hereto and their
respective successors and assignees. Neither party may assign this Agreement without the prior
written consent of the other


No amendment to this Agreement shall be valid or binding unless set forth in writing and duly
executed by the parties hereto. No waiver of any breach of this Agreement shall be binding or
effective unless made in writing and signed by the party purporting to give the same and, unless
otherwise provided in the written waiver, shall be limited to the specific breach waived.

IN WITNESS WHEREOF, the parties have executed this agreement as of the Effective Date.



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                                SCHEDULE A


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                                    SCHEDULE B

                                PRODUCT DESCRIPTION

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