BUSINESS SERVICES / distributorship checklist
CHECKLIST:
INTERNATIONAL DISTRIBUTORSHIP AGREEMENT*
Knowledge • Informed Decisions • Execution of Evolving Plan
Provided by
INTERNATIONAL BUSINESS LAWYERS CONNECTION ™
a division of the
GRENIER LAW OFFICES, PC
www.internationalbusinesslawyers.org
* This is not an exclusive checklist and you should not rely solely on this checklist.
You should consult an attorney as to the specifics of your situation.
1. Parties
a. Obtain proof that parties to contract are registered as
corporations or other legal entities;
b. Use Official registerered name of corporation or legal entity;
c. Use physical address (P.O.Box number is not sufficient) and
jurisdiction of registration or incorporation;
2. Appointment of Distributor
a. Specify agreement to be an exclusive or non-exclusive distributor;
b. Set forth territory;
1. Set forth the standard of performance: "best effort"
and/or other;
2. Specify if there is a right to bind supplier; and
3. Permit or prohibit assignments of the contract and/or
appointment of sub-distributors.
3. Termination of the contract
a. Length of initial term of the contract;
b. Automatic renewal or negotiated renewal;
c. Process and means of notice for termination.
4. Products or Services
a. Define products or services
b. Reserve supplier's rights
1. in event of discontinued products
2. to substitute successor products
c. Set forth distributor's rights to successor generation
of products or services;
1. Exclusive or non-exclusive
2. right of first refusal
5.Prices
a. Attach and include by reference the initial price schedule;
b. Set forth process for increasing prices and notice thereof.
6. Terms of Payment
a. Letter of credit or other terms;
b. If Letter of credit:
1. Confirmed by U.S. bank
2. Irrevocable;
3. Specify whether it is assignable;
4. Specify if whether it permits multiple shipments and/or
transshipment;
5. Set forth requirements for a draw, for example, x days after
inspection, specify documents required;
6. Specify allocation of responsibility for duties/taxes and
other expenses;
7. Consider requiring a Stand-by letter of credit;
8. Include requirement for L/C for future shipments in the
event of late payment
7. Performance requirements
a. Minimum sales targets
1. Minimum monetary amount
2. Minimum units sold
3. Specify process and means of notice for raising or lowering
performance requirements
b. Remedial measures: failure to meet performance requirements
1. Liquidated damages
2. Loss of exclusivity
3. Diminution of territory or product line
4. Termination of Contract
8. Procedures related to Ordering and Shipping
a. Specify reporting requirements, such as forecasts on production
requirements
b. Supplier's discretion to accept, reject, delegate, allocate or
assign orders
c. Attach example of purchase form to be utilized and specify
agreement as to
1. Risk of loss allocation;
2. Insurance responsibility;
3. Impact of 1&2 on price terms.
9. Supplier’s Responsibilities
a. Minimum quantity of products to be supplied;
b. Commitment to accept every order or only orders below
a set maximum;
c. Technical support and training provided;
d. Advertising support.
10. Distributor’s Responsibilities
a. Maintain inventory and inventory record keeping;
b. Post-sale service obligations;
c. Reporting obligations;
d. Right or obligation to obtain assistance of additional distributors;
e. Advertising obligations;
f. Must comply with all applicable governmental laws, regulations
orders and policies; No bribes or payments to government
officials;
g.Education for employees regarding 10.f.;
11. Government filings or approval
a. Set forth requirements;
b. Specify who will have responsibility for pursuing approval
of application(s);
c. Specify remedial measures in the event approval is not granted
within specified time or with preferred conditions.
12. Warranty
a. Conforming with supplier's standard warranty;
b. Indemnification for representations outside of scope of
supplier's warranty;
c. Compliance with local commercial/legal standards;
d. Procedures for claims for defective products.
13. Intellectual Property rights
a. Acknowledgement of supplier's rights;
b. Limitations of distributor's rights to use or license to use
supplier's intellectual property;
c. Distributor must cooperation in infringement actions;
d. Confidentiality
1. Scope
2. Duration
14. Termination
a. Automatic upon expiration of terms, or notice of termination
b. For cause
1. Notice procedure
2. Opportunity to cure
c. No-cure defaults
d. Special circumstances
1. Change of ownership or merger;
2. Insolvency
e. Impossibility to perform
1. Changes in laws or regulations, including duties and taxes
2. War or warlike conditions
3. Frozen funds
4. Other force majeure
15. Assignments:
Only with notice or prior written consent
16. Post-Termination Rights
a. Accounts receivable/payable
b. Outstanding orders
c. Disposition of inventory
d. Survival of claims
e. Survival of intellectual property protection clauses
f. Distinctions in Force Majeure terminations.
17. Dispute Resolution
a. Applicable Jurisdiction and Governing law
b. Waiver of foreign jurisdiction defenses
c. Forum selection clause
d. Arbitration clause
1. Applicable rules and scope;
2. Number and language of arbitrators;
3. Location of arbitration;
4. Binding;
5. Specify who will pay costs and attorney's fees. |
* This is not an exclusive checklist and you should not rely solely on this checklist.
You should consult an attorney as to the specifics of your situation.
