October 15th, 2021 at 8:15 AM by admin

Companies can use distribution agreements for a variety of purposes. Some designate a distributor as a vehicle to bring their products to market. Others appoint a distributor to benefit from their expertise or to share customer lists and contacts in the market. The key terms of a distribution agreement also vary and reflect the requirements and intentions of each agreement. From the manufacturer`s perspective, if you impose quotas or sales targets, be careful how you apply them. The general principles of law essentially state that facts speak louder than words. If you set high goals or quotas in distribution agreements, it is recommended that you apply them consistently. Otherwise, if you later try to end a distribution partnership on the grounds that the merchant has not achieved its goals, you will be faced with the argument that since you have never applied your goals before, you will have to apply that particular goal against that particular merchant for a malicious reason – for example, maintaining the resale price. As these are complex agreements, there are a number of unique issues that need to be addressed. I will ensure that the agreement is properly drafted and protects the rights and business interests of your company. If the distributor is supposed to call customers with a certain frequency, this should also be announced.

Most written errors in distribution agreements are made by parties who lack experience in creating and negotiating these agreements. Most large companies with years of experience with agreements rarely write mistakes in those agreements. Many mistakes are the result of one partner trying to gain an advantage over the other partner by adding a bias to the agreement that favors the party with greater experience. Obviously, the interests differ considerably depending on the side of the table where the parties are located. The manufacturer may want at least some kind of non-compete agreement. On the other hand, a non-compete agreement will almost never be in the best interest of the trader. Non-competition obligations are one of the most legally sensitive subjective provisions of the Treaty. Counsel for both parties is very likely to be able to say with a high degree of certainty whether a particular clause is “reasonable” and therefore enforceable or not. Overall, however, a written agreement will be necessary and appropriate for both parties. While we certainly wouldn`t push as much if we represented a distributor as if we represented a manufacturer, it should be an essential part of any distribution agreement. We also believe that in most distribution agreements that are supposed to last over a period of time, the parties must “go with the flow.” Products change, management changes, brands change, market tastes change and in fact almost everything in the business environment in which the manufacturer and distributor operates, practically guaranteed ten years after signing the contract, can be significantly different.

Most distribution agreements take a long time, so we believe that the letter that embodies these agreements should be flexible enough to adapt to the changing environment without the parties having to constantly modify the agreement. Another issue to consider is whether the dealer should be required to maintain service in the field. If so, at what level and type of salespeople should be hired? Should they be required to have some technical or other training? What kind of training should be offered to them and who should pay for it? The distribution contract may or may not offer the concessionaire the right to remedy the performance of the contract. .