UK manufacturers, set up a distribution network throughout Europe with this Exclusive European Distribution Agreement.
- The distributor agrees not to compete with the manufacturer within the territory.
- The manufacturer reserves the right to sell products to customers within the territory who wish to deal directly with them.
- The manufacturer shall use best endeavours to supply products according to the distributor's purchase orders.
- The distributor must use best endeavours to promote and sell the products, must maintain a minimum inventory, and must meet specified performance targets.
- The distributor must not accept warranty claims without the approval of the manufacturer.
- Procedures to be followed upon termination include return of unsold products and payment of all amounts owing between the parties.
- The parties agree to submit disputes to binding arbitration in the United Kingdom.
This Exclusive European Distribution Agreement is for use by UK companies, and is governed by the laws of England. Downloadable and fully editable.
EUROPEAN DISTRIBUTION AGREEMENT THIS AGREEMENT made effective as of the _____ day of ______________, _______. BETWEEN: [NAME OF MANUFACTURER] a company incorporated under the laws of England, having a registered office at _________________ [give full address of registered office] (the “Manufacturer”) - and - [NAME OF DISTRIBUTOR] a company incorporated under the laws of _____________, having a registered office at _________________ [give full address of registered office] (the “Distributor”) 1. Recitals WHEREAS, Distributor is currently established as a distributor of industrial goods and products for specific geographic areas within Europe, and WHEREAS, Manufacturer wishes to extend the sales of certain of its products in Europe (as defined hereinbelow) and the parties have agreed to enter into this Agreement on the following terms and conditions. NOW THEREFORE THIS AGREEMENT WITNESSES that in consideration of the mutual covenants and agreements contained in this Agreement and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged by the parties, the parties hereby agree as follows: 2. Definitions In this Agreement the following words and phrases shall have the meanings set forth in this Article unless the context clearly requires otherwise. (a) “Agreement Year” shall mean the period of twelve (12) months from the date of this Agreement and each succeeding period of twelve (12) months (in the event that this Agreement is extended for subsequent periods). (b) “Control”, in relation to a corporate body, shall mean the power of any person to secure by law or by corporate structure that the affairs of that corporate body are conducted in accordance with the wishes of that person. (c) “Customer” shall mean an end user customer of Distributor which places orders with Distributor for Products to be supplied by Manufacturer. (d) “Customer Sales Price” shall mean the sales price to a Customer as determined solely by Manufacturer. (e) “Manufacturer Group” shall mean Manufacturer and its subsidiaries, affiliates and any related company or company under the control of Manufacturer. (f) “Manufacturer Standard Terms and Conditions of Sale” shall mean the business conditions as set forth in Exhibit C (attached hereto and made an integral, binding part of this Agreement), as amended or replaced from time to time by Manufacturer. -2- (g) “Net Sales Price” shall mean the invoiced price of the Products on a sale by Manufacturer to Distributor on an arm’s length basis, less such of the following as are shown separately on the invoices: (i) sales, turnover or value added taxes; (ii) packaging, transport, and insurance costs; and (iii) credit on goods returned. (h) “Products” shall mean those products listed in Exhibit A (attached hereto and made an integral, binding part of this Agreement), as the same may be amended or replaced by agreement between the parties. Manufacturer shall have the right to delete Products from Exhibit A if Manufacturer ceases to manufacture such Products. (i) “Sole Right” shall mean a right enjoyed by a licensee in common with the grantor of that right and its successors and assigns. (j) “Territory” shall mean that geographic area set forth in Exhibit B (attached hereto and made an integral, binding part of this Agreement). 3. Distributor Appointment; Term of Agreement Manufacturer hereby appoints Distributor as its exclusive distributor for the sale of Products in the Territory for an initial term of ______ years commencing on the date of execution of this Agreement, which term shall continue thereafter unless and until terminated by either party as hereinafter provided. 4. Termination 4.1 Either party may terminate this Agreement at any time by giving not less than _____ months’ notice in writing to the other party. 4.2 Termination shall operate without prejudice to the rights and obligations of either party which have accrued hereunder prior to the date of termination. 4.3 During any period of notice of termination, Distributor shall be entitled to place orders for future delivery. 4.4 In addition to any conditions of termination set forth elsewhere in this Agreement, either party shall have the right to terminate this Agreement with immediate effect in the event of any of the following: (a) failure of either party to observe any of the terms hereof to a material and significant extent and to remedy the same (where it is capable of being remedied) within thirty (30) days of the date of the notice given by the aggrieved party to the party in default calling for remedy; (b) either party becoming insolvent, or entering into any agreement or arrangement (whether voluntary or involuntary, formal or informal) with its creditors; (c) either party having a receiver or manager appointed for the management of its assets or the disposition of its liability, or any part thereof; (d) an order being entered for the winding up or liquidation of either party (excepting the disposition of assets as part of a merger or consolidation); (e) Distributor being prevented for any reason from performing its duties hereunder for a continuous period of ______ months or for a total period of ____ months in any period of twelve (12) calendar months; -3- (f) if Distributor is a corporate body, a change in the ownership of ten per cent (10%) or more of its share voting rights; (g) if Distributor is a partnership, a change in the composition of that partnership. The party not so affected may terminate this Agreement by notice in writing to operate on the date specified in the notice. In any of these cases the date specified may be a date earlier than the date of the notice so as to defeat any title which a trustee in bankruptcy or a receiver or liquidator or other such person might otherwise acquire to the rights conferred hereby. 5. Effect Of Termination On expiration or termination of this Agreement the following shall operate: 5.1 If Distributor terminates this Agreement, Distributor shall, within ______ calendar days of the date of termination, transmit to Manufacturer a complete list of all unsold Products in its possession or control. Manufacturer shall be entitled, but not obligated, to purchase from Distributor at a price equal to the Net Selling Price which Distributor originally paid Manufacturer therefor (free of all duties and taxes, and carriage paid back to Manufacturer) all such unsold Products which it desires so to purchase, notifying Distributor of its decision within thirty (30) days of the date of termination. The purchase-back price shall be at original Net Sales Price to Distributor, but shall be subject to a _____ percent (____%) restocking charge when this Agreement is terminated by Distributor. Stocks not so purchased may be sold by Distributor within ______ months of termination. 5.2 If Manufacturer serves a written notice to terminate this Agreement upon Distributor, Distributor shall, within ______ calendar days of the date of termination, transmit to Manufacturer a complete list of all unsold Products in its possession or control. Manufacturer shall purchase from Distributor at a price equal to the Net Selling Price which Distributor originally paid Manufacturer therefor (free of all duties and taxes and carriage paid back to Manufacturer) all such unsold “finished goods” Products, with the specific exclusion of (i) all returned Products, (ii) all Products which are not in perfect condition and in the original unbroken packaging and carton quantity, and (iii) all Products which were delivered more than twelve (12) months prior to the date of termination. 5.3 In respect of any Products supplied by Manufacturer the invoice for which has not been paid, Manufacturer may exercise the right of an unpaid seller to re-possess such Products against cancellation of such invoice and Distributor hereby authorises Manufacturer to have access to its premises for such purpose. For the purpose of operating this clause fairly, Manufacturer may apply all payments received in chronological order in relation to shipments dispatched, and may apply any remainder which does not fully discharge an invoice to such items on such invoices as it shall in its absolute discretion determine. 5.4 Outstanding unpaid invoices for which Products have been received shall become payable immediately. 5.5 Distributor shall return all copies (in its possession, custody or power) of any documents, drawings, manuals, literature or other information supplied to it by Manufacturer under this Agreement. 5.6 Distributor shall not be entitled to compensation for goodwill which may have accrued to the marketing of the Products in the Territory. 5.7 The provisions of this Article 5 shall survive termination or expiration of this Agreement. 5.8 Termination of this Agreement shall not affect the rights and liabilities of either party subsisting at the date of termination. -4- 5.9 Manufacturer will not be held liable for any damages or anticipated profits on account of any termination (for any reason) of this Agreement. 6. Non-Competition During the term of this Agreement, and for a period of ______ years after termination, cessation or expiration of this Agreement, Distributor agrees that it will not, either alone or in partnership with any other person(s), firm(s) or corporation(s), be in any way directly or indirectly engaged in the manufacture, purchase, sale or distribution within the Territory of any goods or processes of a nature or application competing with the Products of Manufacturer distributed under this Agreement. In the event of any termination, cessation or expiration of this Agreement, the non-competition obligations herein stated will explicitly survive such termination, cessation or expiration. Distributor hereby acknowledges and agrees that it has received adequate compensation in original appointment as a distributor in return for such non-competition obligations and agrees that such non-competition restriction is reasonable and acceptable. 7. Right Of Direct Sale Manufacturer reserves the right to sell selected Products to the Territory if Customers wish to purchase the Products direct from Manufacturer. 8. No Agency 8.1 It is understood and agreed that the appointment of Distributor under this Agreement shall not constitute Distributor as the agent or employee of Manufacturer. Distributor agrees that it is and shall represent itself only as an independent distributor which has been appointed as an authorised distributor of Manufacturer’s Products. 8.2 Neither party shall be deemed the legal representative of the other for any purpose whatsoever and neither party may assume any obligations of any kind, implied or expressed, on behalf of the other party. 9. Supply Of Products Against Orders 9.1 Distributor shall use its normal purchase orders to purchase Products from Manufacturer. In the event of a conflict between any terms and conditions on such individual purchase orders, the terms of this Agreement shall prevail. 9.2 Manufacturer shall use its reasonable endeavours to supply the Products according to Distributor’s orders, to the extent that it is not prevented or hindered by limitations of availability, production hold-ups, shortages of raw materials or labour and the like. 9.3 Each shipment of Products, in response to Distributor’s order, shall be regarded as a separate contract of sale and no single incident of default in a shipment shall be cause for terminating the relationship between the parties hereunder. 9.4 Purchase orders submitted by Distributor to Manufacturer under this Agreement may not be cancelled or rescheduled within thirty (30) days prior to the agreed shipment date unless the Product requirements necessitating such purchase orders are cancelled by the Customer. Purchase orders outside this thirty (30) day firm window may be cancelled or rescheduled by Distributor. 9.5 In the event that a Customer makes substantive changes in the specifications for Products ordered through Distributor, both Distributor and Manufacturer agree to work together in good faith to understand the financial impact on such changes and whether such require a reimbursement for work-in-progress or a re-design or re-manufacturing to meet the new specification. In the event of a -5- price change for any such change from a Customer, Manufacturer shall notify Distributor of the price impact which shall be passed on by Distributor to the Customer. 9.6 Unless otherwise agreed, each sale to Distributor shall be subject to Manufacturer Standard Terms and Conditions of Sale except where they are inconsistent with the terms of this Agreement, in which case the terms of this Agreement shall prevail. 9.7 F.O.B. point, title transfer and risk of loss for Products shall be as set forth in Exhibit D (attached hereto and made a part of this Agreement). 10. Price and Payment Prices, Customer Sales Prices, and payment terms shall all be determined as set forth in Exhibit D. 11. Performance Targets 11.1 The parties agree that the performance targets for the first Agreement Year shall be that set forth in Exhibit E (attached hereto and made a part of this Agreement). 11.2 The parties agree to meet not less than one (1) month before the expiry of each Agreement Year to agree in writing on annual targets for sales of the Products from Manufacturer to Distributor for the ensuing Agreement Year. 11.3 Distributor will use its best endeavours to meet or exceed the agreed annual sales target, although if the agreed annual sales target is not reached in two (2) consecutive Agreement Years, Manufacturer has the right at its option to: (a) serve a notice upon Distributor notifying Distributor that the rights granted under this Agreement and this Agreement are terminated with effect from the date of the notice, or (b) terminate this Agreement upon giving ______ months notice in writing to Distributor. Such termination for sales target cause is not applicable where such failure by Distributor to meet or beat the agreed annual sales target is caused by failure of Manufacturer to supply Products in response to orders from Distributor which are in line with the annual sales targets. 12. Inventory 12.1 Distributor shall maintain a minimum inventory or stock of Product as set forth in Exhibit F (attached hereto and made a part of this Agreement). 12.2 Annual Product stock return shall be in accordance with Exhibit F. 13. Distributor’s Obligations Distributor agrees to: (a) Use its best endeavours to promote and extend the sale of the Products throughout the Territory; (b) Conduct, at its own cost, promotional programs to stimulate sales of Products within the Territory, subject to the prior written approval of Manufacturer; (c) Give proper consideration and weight to the interests and instructions of Manufacturer; (d) Not directly or indirectly, either alone or in partnership with any other person(s), firm(s) or corporation(s), be in any way engaged in the manufacture, purchase, sale or distribution -6- within the Territory of any goods or processes of a nature or application competing with the Products, except with the written consent of Manufacturer; (e) Not make any representations or give any warranties or other benefits in favour of any proposed purchaser or to the detriment of Manufacturer; (f) Not accept warranty claims on behalf of Manufacturer from customers in respect of Products that are claimed to be or are found to be defective after delivery to customers, without the prior written approval of Manufacturer. Manufacturer assumes no obligation with respect to any Product or Products accepted by Distributor from a customer without written authorisation from Manufacturer. Nothing in this paragraph shall prevent Distributor from taking delivery of Products which are returned by Customers for investigation as to whether a claim exists against Manufacturer for a defective Product; (g) Immediately inform Manufacturer of the details and circumstances of any dispute arising between Distributor and any proposed Customer in relation to the Products; (h) Promptly inform Manufacturer of any facts or opinions likely to be relevant in relation to the marketing of the Products. Distributor shall be responsible for reporting full information to Manufacturer to enable it to ensure that the Products meet local regulations relating to safety, labelling and the like; (i) Supply Manufacturer on request with all available information on Product demand, the names of all current or potential Customers, Product sales per Customer, competition (including prices), market development, reports, returns, and other information as reasonably requested by Manufacturer; (j) Observe any applicable laws in the Territory regarding the packaging, labelling and storage of the Products; (k) Apply for and obtain all necessary licences, permits or other authorisations required by the local law in relation to the promotion, marketing and supply of the Products; (l) Indemnify, defend and save harmless Manufacturer Group, its agents, subcontractors, servants, employees, officers, directors, successors and assigns from and against all loss and liability for personal injury (including death) or damage to property, incurred by reason of any act or omission of Distributor, its sub-tier subcontractors, agents, servants, employees, officers, directors, successors and assigns arising out of or connected with the performance under this Agreement, whether or not such injuries to person or damage to property are due or claimed to be due to the negligence of Distributor, its agents, subcontractors, servants, employees, officers, directors, successors or assigns. Upon request of Manufacturer, Distributor shall promptly defend any demand, claim, cause of action or suit against Manufacturer dealing with personal injury or damage to property, as a result of performance, or non-performance of this Agreement; (m) Indemnify Manufacturer from any loss, liability and fines incurred for or by reasons of the violation of any city, municipal or borough ordinance or regulation, law of the United Kingdom, or law of any other country or political subdivision which result from Distributor’s performance, or non-performance, under this Agreement; (n) Maintain such minimum stocks of the Products as are set forth in this Agreement; (o) On or before __________ [insert date] in each Agreement Year, provide Manufacturer with its forecast for sales of the Products for the next Manufacturer Fiscal Year which commences on __________ [insert date] of each calendar year. Manufacturer reserves the right to require Distributor to provide interim forecasts; -7- (p) Keep strictly confidential, not disclose to any third party and use only for the purposes of this Agreement all information relating to the Products (whether technical or commercial) and to the affairs and business of Manufacturer and any companies in the Manufacturer Group, whether such information is disclosed to Distributor by Manufacturer or otherwise obtained by Distributor as a result of its association with Manufacturer; (q) Refrain from seeking customers, from establishing any branch and from maintaining any distribution depot for Products outside the Territory; (r) Furnish Manufacturer with monthly reports (Point of Sales Reports) covering its sales of Products. All reports are to be submitted in writing and in such form and format as are satisfactory to Manufacturer. The reports must include (i) Customer name and location (including Zip or Postal Code), (ii) Part number, quantity, unit price and extended amount of each sale. Each monthly report shall be received by Manufacturer not later than the 15th of each month; (s) Abide by the Statement of Policy set forth in Exhibit H (attached hereto and made an integral part of this Agreement); (t) Maintain, at all times during the performance under this Agreement, with companies and on terms and conditions satisfactory to Manufacturer, Workmen’s Compensation Insurance as required by the state or country in which Distributor operates, Public Liability Insurance for injury or death to persons, including employees of Manufacturer, Property Damage Legal Liability Ins
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