Companies can use distribution agreements for multiple purposes. Some use a distributor as a vehicle to bring their products to market. Others appoint a distributor to take advantage of their know-how or to share customer lists and contacts in the market. The main conditions of a distribution agreement also vary and reflect the requirements and intent of each agreement. It is important that the distribution agreement defines the products to be obtained. If you are the distributor, it is not a good idea to base the product description on a brand. What happens if the manufacturer changes its brand? Below are a few questions that need to be taken into account when developing the provisions of the product agreement. From the manufacturer`s point of view, if you set sales quotas or targets, be careful how you impose them. The general principles of law essentially say that actions speak louder than words.
If you set high targets or quotas in distribution agreements, you should apply them consistently. Otherwise, if you later attempt to terminate a distribution place on the grounds that the distributor has not achieved its objectives, you will be faced with the argument that, since you have never achieved your goals before, you will have to achieve that specific goal against that special distributor for a malicious reason, z.B. as far as the resale price is concerned. Distribution agreements are an integrated instrument for establishing a relationship between a distributor and a supplier. A well-written agreement can help develop this relationship. The agreement cannot extend the life of a relationship as soon as the relationship expires. A poorly written agreement often results in legal litigation, which in turn consumes management time, financial resources and the involvement of lawyers, courts and arbitration proceedings. A well-written agreement can eliminate resource expenditures for these non-productive activities and encourage the distributor and manufacturer to do their business at the end of the relationship. The international distribution agreement is a framework agreement, i.e. it defines general obligations for each of the parties over an extended period of time and is supplemented by general terms of sale, often attached to the contract, to indicate the products and/or services concerned, prices, delivery terms, etc. Should the distributor have a “primary area of responsibility”? The imposition of such a condition is an attempt by the manufacturer to encourage the distributor to take all possible sales out of a particular sector. Manufacturers are generally concerned about “Skimming” distributors.
Here, a distributor will take the sale simple and fast and will not look for potential new buyers. A mutually beneficial and mutually beneficial agreement between the distributor and the producer could be reached by assigning the distributor a primary area of distribution responsibility, without preventing the distributor from complying with it.
