An international distribution agreement is essentially a contract that creates a framework for a business relationship between the global parties. In order to ensure efficient and effective transactions, an international distribution agreement should be comprehensive. Essential elements of a distribution agreement include the duration (period for which the contract is in effect), the terms of delivery, and the sales areas covered by the agreement (regions within the United States and/or international markets). If the annual termination and semi-automatic extension are included in the contract, both parties have the option to leave the contract once a year without proof of reason. Using this methodology, the partnership is kept united by performance and not by a collection of words in the agreement. Experienced partners always prefer performance as a binding force in the partnership. Most distribution agreements involving experienced distributors and manufacturers allow termination for an important reason and termination for convenience (or no reason at all). Less experienced partners sometimes try to allow dismissal for a limited number of specific causes. Termination for an undisputed reason is sometimes simple and undisputed, such as when a partner files for bankruptcy.
However, partners sometimes disagree on the presence of a cause. Partners often disagree on the responsibility of the cause. The agreement should also set the duration of the business relationship. In addition, procedures should be put in place to address issues related to extension and termination. g. The obligations of the beneficiary Party referred to in this Section 6 shall apply for a period of [number of years] after the termination or non-termination of this Agreement. For the avoidance of doubt, the distributor`s customer and sub-distribution lists are considered protected information under this Agreement. Companies carrying out this type of cross-border activity need well-structured international distribution agreements.
Since these are complex agreements, there are a number of unique problems to solve. I will ensure that the agreement is well drafted and protects the rights and business interests of your company. Most of the errors in distribution agreements are made by parties who lack experience in developing and negotiating distribution agreements. Most large companies with years of experience in agreements rarely write mistakes in these agreements. Many mistakes are the result of a partner trying to give itself an advantage over the other partner by inserting into the agreement a bias that favors the party with more experience. The best distribution agreements allow for termination of the business and termination for convenience. If an agreement allows termination for convenience, a partner who wishes to detach from the agreement gives the other partner 30 days` notice. If the convenience clause is invoked, it is not necessary to argue the cause and responsibility of the cause.
Most importantly, the distribution contract doesn`t end in a legal skirmish. In the absence of a legal confrontation, distributors and manufacturers can focus on their respective customers and businesses, without using management time, corporate concentration and financial resources for lawyers, courts and arbitration proceedings. one. Subject to the terms set forth in this Exclusive Distribution Agreement, Supplier appoints Distributor and Distributor accepts such appointment and agrees to act as Supplier`s exclusive distributor for Supplier Products (defined below) in the geographic area defined as follows (the “Area”): a. exclusive date. Subject to the terms of this Distribution Agreement, the Company shall appoint and grant to the Distributor the exclusive right to sell and market the Products to customers in the Territory (the “Customers”) and to provide other services as distributors to the Company, as set out above. . . .