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Contract Knowledge Centre · Commercial
An agreement appointing someone to sell or distribute your products, or appointing you to distribute another party's.
Distribution arrangements allocate a market. Territory, exclusivity and termination decide what happens to the customer base you build.
What each clause is for, and what to look at in the wording you have been given.
Territory and exclusivity
Defines the market allocated.
What to check: Whether exclusivity is matched by minimum performance commitments.
Minimum purchase or performance
Keeps exclusivity earned.
What to check: That targets are achievable, and what happens if they are missed.
Pricing and margin
Sets the commercial terms.
What to check: Whether the supplier can change prices unilaterally.
Brand and trade mark use
Licenses use of the brand.
What to check: Scope of the licence, and what happens to it on termination.
Termination and post-term
Ends the arrangement.
What to check: Treatment of stock, outstanding orders and the customer relationships built up.
Competition and restrictions
Limits dealing with competing products.
What to check: Whether restrictions are proportionate and lawful.
Any one of these can have an innocent explanation. Ask for it before you sign.
When to speak to a lawyer