A distribution agreement typically is an agreement between a supplier and a distributor of goods / products setting out the terms and conditions of distribution and supply.
They are also commonly known as the following types of agreements:
- Re-seller Agreements;
- Licence Agreements; and
- Supply or Distribution (or both) Agreements.
If you have a product you wish to distribute or you are desirous of being a distributor of the product, it is prudent that any distribution agreement sufficiently defines each parties rights and obligations including but not limited to:
- prohibitions against the distributor distributing other similar products;
- the permitted distribution territory;
- Pricing structures, payment terms and mechanisms for reviews or increases;
- Delivery procedures and responsibilities;
- Whether exclusive distribution rights are being conferred and subcontracting ability of distributor;
- marketing obligations;
- quota or minimum key performance indicators or conditions; and
- warranties as to the product or terms of supply.
Because of their tendency to cross State, Territory and International borders, a Distribution Agreement needs to be carefully drafted by an experienced commercial lawyer. Particular care needs to be taken to ensure that it does not too heavily favour one party by giving too much control over how the distribution should occur, or how the other party should operate or be restricted from operating its business.
Such an agreement could run the risk of contravening Commonwealth or State and Territory Laws that cannot be contracted out of such as:
a) being void under the unfair contracts regime under the Competition and Consumer Act 2010 (Cth) or falling foul of the other provisions (such as unconscionability, misleading and deceptive conduct, anti-competitive behaviour etc) of that Act or the Australian Consumer Laws contained in Schedule 2 of that Act; or
b) an accidental franchise agreement, resulting in the application of and requiring compliance with the relevant franchising laws of Australia, including the Franchising Code of Conduct.
Our team of business and commercial lawyers can assist with the drafting and negotiation of distribution agreements and ancillary agreements to ensure that your interests are adequately protected.