Agreements between manufacturers and others (the “Company”) with distributors of products (the “Distributor” and “Distributor Agreements”) should be in writing and should cover matters which can become points of serious contention.
Here are some of those matters which should be addressed:
- clear identification of the products
- clear language on whether the Distributor is given any sort of “exclusive”, as to geographic territory or types of customers
- clear identification of the products
- if there is an exclusive territory and any “house accounts” are to be excepted, does the agreement clearly identify the accounts
- is the Distributor to be permitted to sell other products or services, so long as they are not competitive with the Company’s products or services
- what is the term of the agreement; and if the agreement contains an exclusive, are there minimum purchase requirements which, if not met, would entitle the Company to terminate the Distributor
- is there any initial price list and how much advance notice is required as to changes in prices
- are there to be any restrictions on pricing by the Distributor to its customers
- what are the terms of payments by the Distributor to the Company
- is it clear that purchase orders from the Distributor must be in writing and are subject to the Company’s acceptance and written confirmation, which may be denied in the Company’s sole discretion
- what warranties are to be made by the Company and what procedures must be followed for the Distributor to follow to pursue the warranties
- is there a limitation on the Company’s responsibility for consequential damages if the product is defective
- should there be a provision for non-binding mediation before litigation and where the mediation is to be conducted
- should there be specific provisions as to what state’s laws govern the agreement and in what state or states any litigation can be brought