A supplier may decide to appoint a distributor as opposed to an agent. Below are some practical considerations for a distributorship agreement:
- What type of distributorship agreement is to be applied? (exclusive distributorship agreement, sole distributorship agreement, non-exclusive distributorship agreement or selective distributorship agreement).
- Define what products are to be sold and distributed.
- Define the exact territory.
- For how long is the Agreement to subsist?
- Price, payment, title and delivery ought to be considered.
- Is the distributor able to appoint a sub-distributor or agent of the sale of the products in the territory?
- Who is to be responsible for all customs clearances and payment of duties?
- Is the distributor to acquire any intellectual property rights in the products?
- What are the distributor’s obligations?
- What are the principal’s obligations?
- How are disputes to be resolved?
- Has the issue of trade marks and patents been considered?
- In the event of a breach of obligations by either party, what is the termination procedure?
- What is the effect of termination?
- Restrictive covenants, warranties and exclusion clauses should be considered.