Distribution Agreement
(Pro-supplier, Short-form)

Summary

This distribution agreement can be used when a manufacturer or supplier appoints a distributor to sell its products in a designated territory. The template contains practical guidance, drafting notes, and alternate and optional clauses. This template has been drafted with terms that favor the seller/manufacturer. The document is a short form that contains only the essential terms of the parties' agreement. The template contemplates that the distributor will market and sell the manufacturer's goods in a designated territory on a non-exclusive basis, meaning that the seller may appoint other distributors and/or sell its goods directly to customers in the distributor's territory. The template has not been drafted based upon the laws of any particular state. Accordingly, when drafting and negotiating the agreement, you should carefully review the laws of the state(s) in which the distributor will be performing the agreement to ensure compliance with any applicable state laws. A distribution agreement will establish the terms and conditions under which a party (the distributor) will promote and resell the goods of another party (the seller/manufacturer). The distributor is an independent entity that will control its business operations, and usually makes its profit from the resale of the seller's goods to third parties. As a distribution arrangement will be a critical part of both parties' businesses, it is essential to properly memorialize the parties' respective rights and obligations, as the failure to do so can have significant adverse consequences for one or both parties and result in costly litigation. For a distribution agreement with detailed terms favoring the distributor, see Distribution Agreement (Pro-Manufacturer); for a short form agreement with exclusivity, see Exclusive Distribution Agreement (Pro-supplier, Short-form). For additional guidance on drafting a distribution agreement, see Drafting and Negotiating a Distribution Agreement, Distribution Agreements, Distributor, Reseller, and Dealer Laws, Distribution Agreement Drafting Checklist (Manufacturer), Supply Chain Fundamentals, and Third Parties in Supply Agreements: Minimizing Risk. For a full listing of content related to distribution arrangements, see Distributor Resource Kit. For a full listing of related supply of goods content, see Supply of Goods Resource Kit.