| Distribution & Supply Agreements |
|
Although you will often find these two types of agreements grouped together, there are a number of different issues which we believe make the two quite separate and require individual focus on either the supplier or distributor. The financial and commercial positions of the parties will often dictate where the focus should be. |
Distribution Agreements:
This needs to be used where one party is to sell products or goods (the "Distributor") of another party (the "Supplier") in a specified territory or territories. The territory could be national, international or local. These agreements can be sole, selective, exclusive or non-exclusive and will give the Distributor a right to sell the products from the Supplier in the agreed territory or territories.
The agreement will also for example contain the following:
- detailed price list;
- accurate description of the territory;
- detailed list of the products or goods;
- marketing and support provision;
- minimum amount of stock that must be held by the Distributor;
- duties and responsibilities of both parties;
- detailed requirements for confidentiality;
- termination rights of both parties; and
- buy-back option to the Supplier.
A properly drafted distribution agreement clearly defines the responsibilities of both the Supplier and Distributor and so helps to ensure that both parties adhere to the terms of the agreement and ensure a well run distribution network that creates profits for both parties.
Supply Agreements
These specific type of agreement are more commonly found where this is no element of exclusivity and the Supplier is in the stronger bargaining position.
In supply agreement the focus is very much on the Supplier and the additional control he or she wishes to retain over the products or goods he is supplying. The Supplier needs to consider whether he wishes to have ultimate contact with the customer for example in relation to any bespoke products that he or she may sell. He or she will also need to consider credit risk issues of any intermediary, whether he wishes to monitor the reputation of his or her company, the risk he or she wishes to pass on/and or retain to each distributor.
There are also a number of different European regulations which a Supplier will need to be aware of before deciding whether to agree to such an agreement or decide on a different route.
We have a number of years of experience of dealing with all such matters including carrying out negotiations for the suppliers and distributors for international companies. Our knowledge and skills allow us to ensure that even if our client is in a weaker position, he or she still has a favourable outcome.
For further information please contact:
john.davies@vshlaw.co.uk or
su.knowles@vshlaw.co.uk or
martin.jinks@vshlaw.co.uk
|
