CHAPTER 19
Distribution Agreement not only possesses, but owns title to the goods being sold, unlike a sales representative, who may possess the goods temporarily (or who may simply take orders that are filled directly by the manufacturer) but does not own them. A distributor is usually not considered an agent of the manufacturer. The distributor is acting on his or her own behalf, typically by purchasing the goods from the manufacturer, adding a profit margin, and reselling the goods. In comparison to a franchise, a distributorship is less controlled by the manufacturer. A distributor is supplied with products, while a franchisee is supplied with an entire marketing package, business operation training, and the product line. The following agreement is purely illustrative. Your final contract should be reviewed by an attorney familiar with the laws of countries of both the manufacturer and the distributor because of the complexity of this relationship.
A DISTRIBUTOR
Sample Contract: Distribution Agreement This Agreement is made on [date] between [name], [a/an] [specify e.g., individual or type of entity and nationality or place of formation] of [address] (the “Manufacturer”), and [name], [a/an] [individual or type of entity and nationality or place of formation] of [address] (“Distributor”).
The agreement binds the parties who sign it, and these should be identified here. To ensure that there is no misunderstanding, the full name and business address of each party should be given. If a party is an entity, partnership, corporation, limited company, or otherwise, the type of entity should be disclosed here. In international contracts, the description of each party includes the party’s nationality. Examples of descriptions: “a Société Anonyme organized and existing under the laws of France,” “a partnership organized and existing under the laws of the State of California in the United States of America,” or “an individual who is a citizen of Singapore.”
COMMENT:
RECITALS A.The parties acknowledge that the Manufacturer produces and sells [describe goods or the goods listed in the Current Product List attached to this Agreement] and may develop and manufacture additional [type of goods] for similar purposes in the future (the “Goods”). B. The Manufacturer desires to appoint the Distributor as its sole and exclusive distributor in [state and/or country] (“Territory”). C.The Distributor desires to act as the exclusive distributor for the Manufacturer’s Goods in the Territory.
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