A distribution agreement is a legal instrument under which a party, usually the supplier or manufacturer of products called the principal, appoints another party to distribute their products in a territory. This allows the principal to conduct business in another territory without actually entering the market or setting up a separate company. A distribution agreement thus is cost efficient method for a supplier or manufacture to sell their products in different geographical territories.
Who is a Distributor?
A distributor is a party who has been authorised to act on behalf of the principal to distribute products in a territory. A distributor buys the products from the principal, usually at reduced prices, and then sells the products in a territory.
Who is a Principal?
Principal is either the manufacturer or supplier of the products and takes the services of a distributor to distribute these products. The principal agree on payment mechanism by giving discount on products and allow distributor to distribute the products.
Why should one enter into a distribution agreement?
Any person or an entity conducting their business can increase their presence in the market by employing the services of a distributor. A distributor, on behalf of its principal, imports, markets, offers, sells and distributes the products.
A distribution agreement also helps a client to save on their finances by employing the services of a distributor rather than coming up with its own physical presence or office in that territory, thus saving on costs.
What does a distribution agreement cover?
A distribution agreement can have any terms that the parties may mutually agree upon. However, it would usually cover the following:
- Personal information with respect to the principal and distributor: These are important to define the parties to the agreement who will engage in the legal relationship under the distribution agreement. These would generally include the names, addresses and email IDs.
- Commencement date of the agreement as well as the expiry date of the agreement: A distribution agreement should always have a defined starting date.
- Products: Under the agreement, which products are the subject matter for distribution, is important as they form the basis of why the parties entered into an agreement in the first place.
- Applicable law for the agreement and jurisdiction: This is one of the most important clauses in any agreement as it defines the law which will govern the agreement as well territorial jurisdiction of any litigation to be filed, if any.
Our online form allows choosing all possible options in terms of dealing with disputes under the agreement.
The objective of having detailed provisions in a distribution agreement is to mitigate the risks associated with cross border disputes between the parties. More streamlined provisions in an agreement allow the parties to have confidence that their rights are duly protected. Our distribution agreement is compliant with applicable UAE law and regulations.
Our online form provides for a range of customisations that cater to all clients on a case-to-case basis. We provide our clients with more freedom and control in terms of what their agreement should cover. Please see our different packages to see various options available to the clients.
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