A distribution agreement is an agreement between two parties whereby one party agrees to supply products to the other party to sell the products in the market in the particular geographical areas or in multiple regions and the same shall be mutually agreed between the parties to do so. It can be done at national or international market levels both by having the marketing rights in hand so that desired goals can be fulfilled. Here, the supplier of goods/products/assets can be the manufacturer itself or it can also be done by the distributor also where it is re-selling the goods/products/assets of another. It is a common prevailing practice which is done with an intention to promote the sale and make the product reachable and accessible to targeted consumers with the potential to attract more consumers & its market.
It should be noted that the distribution agreement can be of several kinds like Exclusive distribution Agreement or Sole distribution Agreement or Selective Distribution Agreement or Non-exclusive Distributorship Agreement. Thus, the crafting of the agreement must be in accordance with the desired type of agreement opted by the parties subject to a contract with regards to product distribution/resell.
THIS DISTRIBUTION AGREEMENT (the “Agreement”) is made and entered into as of ____________ (the “Effective Date”),
BY AND BETWEEN
(Party A) having its registered Office at, (Address) (hereinafter referred to as “Distributor) (which expression shall unless it be repugnant to the context or meaning thereof, be deemed to mean and include its successors and assigns) of the one part.
(Party B). having its Registered Office at (Address) , (hereinafter referred) to as “Company” (which expression shall, unless repugnant to the context or meaning thereof, mean and include their successors and assigns) of the other part;
WHEREAS, the Company is engaged in the business of [description of business]
WHEREAS, Distributor desires to purchase the Products from Company for resale in the territories or geographic areas
WHEREAS Company desires to appoint Distributor as its distributor of the Products in the Territory, and Distributor agrees to such appointment subject to the terms and conditions set forth in this Agreement.
NOW, THEREFORE, In consideration of the mutual covenants and promises made by the parties hereto, the Distributor and the Company (individually, each a “Party” and collectively, the “Parties”) covenant and agree as follows:
In this Agreement:
1.1. "Effective Date" means the date upon which the appointment of the distributor under this Agreement commences as specified in clause ____of the agreement.
1.2. “Intellectual Property (IP) Rights” means the designs, specifications, trademarks, trade names, copyright, patents, proprietary information and processes, know-how and other intellectual property rights in the Products, whether registered or not, which belong to the company in relation to Products.
1.3. "Minimum Sales Targets" means the minimum sales targets for the Products listed in clause ____.
1.4. "Products" means the products of the Company specified clause 3 of the agreement and good/product/item shall be subject to usage interchangeably.
1.5. "Territory" means the entire territory of INDIA or ______ (specific part of the state).
1.6 “ Best Efforts” Distributor shall use its best efforts to promote and sell the Products to the maximum number of customers in the Territory.
1.7 ‘Sales Limited to Territory” Distributor shall not solicit orders from any purchaser with its principal place of business located outside the Territory.
1.8 “Customers” means all end user customers within the territory who purchased the products.
SCOPE OF SERVICE
1.1 The Company hereby appoints the Distributor as the Distributor of the Products for the Territory as prescribed by the Company
1.2 Distributor hereby accepts said appointment and agrees not to solicit orders in a direct way outside the Territory
1.3. The Distributor shall re-sell Products in its own name and for its own account and risk in the Territory.
3.1 The Products made and sold by the Supplier to the Distributor for distribution shall be decided mutually between the parties by writing mail to the Distributor and the Distributor shall acknowledge the same for purchasing the product by the Company.
3.2 The Products made and sold by the Supplier to the Distributor for distribution hereunder shall be annexed as Annexure A in this Agreement
OBLIGATIONS OF THE COMPANY
4.1 The Company agrees to sell to the Distributor at the prices mutually decided by the parties from time to time.
4.2 The Company agrees to provide such marketing assistance to the Distributor as required in the promotion of the products.
4.3 The Company agrees to abide by the terms and condition and grants the exclusive distribution rights in the Territory for the products to the distributor.
4.4 The Company shall make sure that products subject to distribution by the other Party are in compliance with the legal metrology requirement.
4.5. The Company shall not be responsible for incase the distributor is unable to make the sale of the goods purchased from us.
4.6. The Goods/products shall be of the quality and in quantity as agreed between the parties as per this agreement herein.
4.7. The company shall collect back the goods or products given to the distributor which are provenly inferior and not as assured.
OBLIGATIONS OF THE DISTRIBUTOR
5.1 The Distributor shall not in any way alter the nature, quality or packaging of the Product and shall not make any misleading representations of the Product being purchased by the Company.
5.2 The Distributor is allowed to store and transport the Product in a manner at its sole discretion.
5.3 The Distributor agrees to use its best efforts to promote the sale of the product of the Company in the Territory.
5.4 The Distributor is not authorized to make sales of Products outside the Territory as decided by the Company.
5.5 Distributor hereby agrees to obtain required licenses or permits by supplying such products to the responsible users.
5.6 Distributor shall employ competent and experienced sales and support sales personnel so as to render adequate service to the users of the Products in the Territory.
RELATIONSHIP OF PARTIES
Distributor shall act as an independent contractor and nothing in the Agreement shall create or be deemed to create a partnership or relationship of principal/agent, employer/employee or joint-venture between the Parties.
PRICING AND PAYMENT
7.1 The Distributor shall pay for the Products shall be made in Indian rupees to the Company in net ____ days from the date of the delivery of Products to the Distributor's warehouse via online or offline mode of payment or as mutually agreed in between the parties hereto.
7.2 Any price increases for the Products will be negotiated between the Company and Distributor at least ____ days before the increase's implementation.
7.3 In the event of a price increase, the Distributor can order one month's supply of the Products at the existing price before the increase.
7.4 The Distributor and Company shall agree on an annual basis, or more frequently if required, the price customers will pay for the Products.
MINIMUM SALES TARGETS
8.1. As per the Agreement, the Distributor must purchase the products of INR ____ per calendar quarter to maintain exclusivity. Failure by Distributor to meet this minimum shall subject Distributor to loss of exclusivity and possible termination of this Agreement.
8.2. If each quarterly sales minimum is met as outlined above then the Distributor shall be entitled to renewal of its exclusivity under this Agreement.
LABELLING AND LIABILITY
9.1 The Company will procure that the packaging of the Product contains all warnings and instructions regarding the safe use, transportation and storage of the Product as may be adequate and compulsory in the Territory in compliance with the legal metrology.
9.2 The Distributor warrants that any and all warnings and instructions printed on, attached to or accompanying the Product will remain legible and shall not be changed, covered or removed, in whole or in part, or in any other way may be illegible.
TERMS AND TERMINATION
10.1 This Agreement shall be effective on the date hereof (Effective Date) and shall continue for _____ year from the effective date, unless terminated sooner according to this agreement.
10.2 Either party may terminate this Agreement upon notice in writing to the other party if:
10.1.1 if the other party is in breach of any obligations contained in the Agreement, which is not remedied within ___days of written notice from the other party.
10.1.2 if the other party found to be involved in a case of dishonesty, disloyalty, or fraud.
Distributor herein shall keep accurate records of accounts with supporting invoices and vouchers of any and all transactions relating to the Products.
During the term of this Agreement and for a period of _____months thereafter, Company shall have the right to inspect and audit such records relating to the products.
INTELLECTUAL PROPERTY RIGHTS
The Distributor shall only sell the Products under the name, trademark and trade name used by the Company in connection with the Product, unless a third party is entitled to a trade name or trademark within the Territory. The Distributor shall refrain from any other use of the name, trade mark or trade name of the Company. The Distributor shall further refrain from using any other name, trademark or trade name on the Products and the packages thereof. The Distributor shall not register or use trade names or trademarks or any other intellectual property rights for the Product without the written approval of the Company.
Distributor agrees that by reason of its relationship with Company hereunder it will have access to certain information and materials concerning Company's business plans, customers, technology, and products that are confidential and of substantial value to Company, which value would be impaired if such information were disclosed to third parties. Distributor agrees that it shall not disclose to any third party, any such confidential information revealed to it by the Company.
Both the Parties in pursuant to this agreement shall each other indemnify and hold free and harmless from any and all claims, damages, or lawsuits arising out of intentional or negligent acts or omissions by other party or its employees or agents herein.
LIMITATION OF LIABILITY
In no event shall either party be liable to the other for any special, indirect, exemplary or consequential damages arising out of this agreement or purchase or use of the products.
Neither Party shall be held liable for any failure to perform that is due to any cause or circumstance beyond the reasonable control of such Party, including without limitation a demand for such Products and other products manufactured by Company which exceeds Company’s ability to supply them, earthquakes, fire, accidents, floods, storms, other Acts of God, riots, wars, rebellions, strikes, lockouts or other labour disturbances, national or international emergencies, failure to secure materials or equipment from usual sources of supply, failure of carriers to furnish transportation, government rules, regulations, acts, orders, restrictions or requirements or any other cause or circumstance beyond the reasonable control of such Party.
Neither party shall be entitled to assign or transfer any of its rights and obligations under this Agreement without the prior written consent of the other Party.
GOVERNING LAW AND JURISDICTION
This Agreement and any disputes arising hereunder shall be governed in accordance with the laws of India. All disputes, differences and/or claims arising out of, or relating to, or in connection with this Agreement or the breach, termination or validity thereof shall be referred to the exclusive jurisdiction of the courts of New Delhi, India for resolution of such disputes. The final judgment shall be final and binding on the parties..
If any of the provisions of the Terms are determined by any competent authority to be invalid, unlawful or unenforceable, such provision will to that extent be severed from the remaining Terms, which will continue to be valid and enforceable to the fullest extent permitted by law.
This Agreement may not be amended for any reason without the prior written agreement of both parties.
The failure of either party to enforce any provision of this Agreement shall not be construed as a waiver or limitation of that party's right to subsequently enforce and compel strict compliance with every provision of this Agreement.
All notices, request, demands or other communications required or permitted by the terms of this Agreement will be given in writing and delivered to the ________and ______at the following addresses:
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