Distributor Agreement Checklist
It’s an exciting time when a business starts to take off and grow.
However, this also brings new challenges, as the business must continue innovating and expanding. This can be a complex process but can be achieved with proper planning and execution.
Business expansion comes in many different forms.
The most common methods SMEs in Singapore is the use of distributors to increase/expand their distribution channels.
Why Use Distributors?
- If suppliers/manufacturers are unfamiliar with the market, it can be daunting to deal with exports in volume.
- Distributors possess the necessary resources to exploit the new market for the best product.
Who Are Distributors? What Do They Do?
- A Distributor is a party who distributes goods/products to retailers.
- There is no concrete relationship between the Supplier and its Distributor.
- The Distributor is an independent party who buys the goods/products from the Supplier/Manufacturer and resells it to their customers.
- Distributors are sometimes also known as resellers.
- When appointing distributors or becoming a distributor, it’s crucial to understand the terms and conditions of the distributor agreement clearly. This Distributor Agreement Checklist will help you cover all the significant issues in a distributor agreement, reducing legal costs when meeting your lawyers to prepare the distributor agreement.
Checklist for Distributor Agreement
- When appointing distributors or becoming a distributor, it’s crucial to understand the terms and conditions of the distributor agreement clearly.
- The Distributor Agreement Checklist will help you cover all the key distributor agreement clauses, reducing legal costs when meeting your lawyers to prepare the distributor agreement.
1. The Parties
Whom are the parties involved?
2. The Products
- What are the products involved?
- Will the distributor be selling the supplier’s full range of products?
3. The Territory
- What are the areas in which the products will be distributed?
- What happens if the distributor sells outside the territory (e.g. penalty)?
- What happens if other distributors sell within the distributor’s territory (e.g. compensation)?
4. The Scope of Appointment
Is the appointment for an exclusive distributorship or a non-exclusive distributorship?
5. The Duration of the Appointment
- Is the appointment for a fixed period?
- Is there any automatic renewal clause?
- Is there any minimum period?
6. Obligations of the Distributor
- Duty of the distributor to purchase a minimum quantity
- Duty of the distributor to maintain inventory
- Duty of the distributor to promote the products
- Duty of the distributor to provide sales records
- Duty of the distributor to provide after-sales services
7. Obligations of the Supplier
- Duty of the supplier to supply the products
- Duty of the supplier to provide information about the products
- Duty of the supplier to provide education and technical support
8. Competitors’ Products
Can the distributor sell suppliers’ competitors’ products?
9. Trademark and Intellectual Property
Rights of the distributor to use suppliers’ trademarks and other intellectual properties
10. Terms of Sale / Price of the Products
- How are prices charged to the distributor?
- How are prices charged to the consumer?
- Is the distributor free to set its prices?
- Can the supplier change the prices?
- What are the payment terms for the distributor?
11. Warranty of the Products
- Does the supplier provide a warranty for the products?
- What obligations does the distributor have with regards to the warranties?
- Is the distributor authorised to repair the products?
- Will the supplier provide training to the distributor to repair the products?
12. Defective of the Products
- What happens if the distributor receives defective products?
- What are the procedures for defective products?
13. Promotional Exercises
- Is it mandatory for the distributor to participate in all promotional events organised by the supplier?
- How is the cost of conducting promotional events allocated?
14. Termination of the Agreement
- When can the supplier terminate the distributor’s appointment (e.g. failure to pay, failure to meet quotas, failure to comply with terms of the agreement)?
- Can either party terminate the agreement without reason?
- Is there any notice period required for termination?
- What happens to unsold products when the agreement is terminated?
- How to return unsold products (e.g. original condition)?
15. Governing Law / Jurisdiction
Which country’s law prevails in the event of a dispute?
A Distributor Agreement is an essential legal document that helps to protect both the distributor and the supplier.
Using this Checklist, you can be sure that you cover all of the critical issues in a Distributor Agreement, reducing the chances of any legal disputes arising in the future.
Speak to us over video consultation via Lawyer Anywhere. We can help you address all of the significant issues in the distributor agreement, so you can feel confident that you’re making the right decision.