In some distribution agreements, competition is an important factor. The common clauses in a distribution contract limit the distributor to sourcing similar products from the supplier or wholesaler. In addition, there may be a restriction for a distributor to compete with the supplier or wholesaler during distribution or agreement and even after expiry. However, competition restrictions may not apply to all products. They generally apply where the product is unique (and cannot be purchased by other suppliers or wholesalers) or where the distributor has greater bargaining power. List distributed products: A distributor may be excellent for distributing a particular product, but cannot distribute other products. Therefore, it is advisable to carefully define the purpose of the agreement and to give explicit reference to issues such as updated or updated products. For example, if you refer some software to products for sale under the agreement, you might consider that recent versions of the software are covered by the distributor`s exclusive rights, and another may consider them to be outside the scope of exclusivity (and there is no doubt about who is one and who is the other). For many exclusive agreements, suppliers or wholesalers may require the distributor to maintain a level of performance.
Their performance may be based on revenue targets or minimum orders. Such clauses help to ensure the justification for exclusivity agreements. A minimum or minimum performance clause also codifies the possibility of appointing additional distributors for a given territory when a distributor does not act in accordance with the standard. Minimum standards should ideally be established before both parties enter into the distribution agreement. Setting standards in advance ensures that both parties are aware of the obligations and requirements they must meet. In any event, the main conditions of a distribution agreement should clearly state when and how both parties accept and pay for an order. Like other trade agreements, it is imperative that an international distribution contract clearly clarify the responsibilities of each party. Both the supplier and the distributor must have clarity on their obligations that must be met under the terms of the transaction. This table briefly highlights some of the most important questions you should ask yourself when designing or reviewing a distribution agreement.