As mentioned above, one of the most sensitive points of any distribution agreement is how it is terminated. A manufacturer may request a provision stating that the distribution contract may be terminated at any time in the very short term. Another possibility is that the manufacturer requires the agreement to last one year, with the possibility of extending it from year to year. The key is that the manufacturer wants to have as much control as possible over the duration of the distribution partnership and wants to have a way out without really “ending” the distribution partnership. There are many different business requirements that a manufacturer/supplier may require from a reseller they wish to appoint, which are maintained throughout the term of the agreement. For example – and the list is not exhaustive – the granting of administrative authorisations for the marketing of products on the relevant market; the establishment of a marketing system for products; advertising; participate in conferences; the employment of professional staff; technical/professional customer support; a warranty and repair system, etc. Often, from the outset, the definition of such conditions is very indicative of the character and nature of the distributor and, above all, of his intention and willingness to establish a long-term supplier-distributor relationship. Sometimes the distribution agreement indicates the responsibilities of the distributor either in terms of objectives, quotas, or in terms of necessary purchases. There are pros and cons to any way to say it anyway. We believe the key lies in the fact that manufacturers and distributors set a pleasant “goal” for both parties.
This makes it more likely that the goal will be achieved, as it generates mutual commitment and interest. A prior analysis and a thorough understanding (both legally and commercially) of the identity of the intended distributor is of great importance. First, the distributor could be a link in a larger distribution chain; The owners of the distributor may operate directly or through related companies/related companies in other areas and in additional markets. Consideration should be given to the financial robustness of the distributor and its technical capabilities in the relevant field and field. The number of years the distributor has operated in the region and its past performance should be examined, usually in its activities with the manufacturer/supplier`s direct competitors. In this way, after receiving a complete picture of the dynamics of the potential distributor, legal mechanisms to respond to how it is likely that the distributor will act in its relationship with the current manufacturer/supplier can be anchored in the agreement. It will also give an idea of the working methods of the trader and those of his owners and be properly treated within the framework of the agreement. Both parties will likely want a “merger clause” or a “global agreement” clause. These simply say that the contract is the whole agreement between the parties and that no party can then assert that the terms of the contract are different, based on oral interviews, correspondence, file memoranda, etc. In principle, the “global agreement” clause is good contractual practice. Indeed, if two people sit down and negotiate a contract, it should be the contract and its terms should not be changed by conversations, phone calls, letters, etc.
The remainder of this section contains standard distribution agreements ranging from very short agreements to more complex ones. In our experience, the most typical agreement is a four-page memory agreement that is made on 11 x 17 papers, so the complete agreement is included on a single sheet. Printing is usually easy to read – with quite a large handwriting, contrary to what you might see on an order or agreement with terms of sale..