distribution agreement

Distribution agreements are contracts used by suppliers to distribute their goods in a defined territory - a country, region or location. The distribution agreement mitigates the requirement to establish their own distribution network in the territory. The appointment of the distributor leverages the appointed business's, distribution and marketing skills who presumably has local market knowledge and contacts that would otherwise not be available to the supplier. The form of agreement dispenses to a large part the capital expenditure required to establish an equivalent market presence.

Key points in distribution agreements include whether the distributor will be granted exclusive or non-exclusive rights to distribute, the territory that the appointment will cover and whether the supplier themselves will be permitted to distribute (themselves or by another) competing products within the territory.

Usage: The exclusive distribution agreement granted the right for the business to sell the manufactured product to the exclusion of all others in the UK.

Related Words: agency agreement; capital expenditure; option agreement; framework agreement; contract; agreement.