There are significant risks associated with ordering a distributor. The development of the distribution contract can help mitigate these risks and realize the potential benefits of your relationship. Suppliers who use channel partners as part of their distribution network can use a one- or two-step distribution channel. In a one-step distribution system, the provider develops relationships with channel companies such as VARs, System Integrators (SIs) and Managed Service Providers (MSPs) — which sell to end customers. In a two-tier system, the supplier sells products to an independent distributor who in turn supplies products to channel partners who then package solutions for end customers. The two-step model requires dealer agreements to facilitate relationships between distributors and channel partners. However, overall, a written agreement will be necessary and appropriate for both parties. Even if we were certainly not as pressing to represent a distributor as if we were to represent a manufacturer, it should be an integral part of any distribution agreement. d. Sub-agents.
The distributor may designate sub-agents, negotiators, sub-representatives or others who act on behalf of the distributor or otherwise fulfill the distributor`s obligations under this agreement within the territory; provided that (i) any compensation for these sub-agents, sub-agents, sub-representatives or other persons, to act on behalf of the distributor or to discharge any other of the distributor`s obligations, is exclusively the responsibility of the distributor, and (ii) that appointment does not deprive the entity of the essential rights to which it is entitled under this Agreement. An agreement with this sub-agent, negotiator, deputy representative or any other person does not exceed the duration of this agreement. Beware of exclusivity: exclusivity can be one-sided, i.e. the distributor is your only distribution channel on the market, but it can sell competing products. Similarly, you can deliver your product to other people, but the distributor is not allowed to sell the products of its competitors. In reality, these unilateral agreements generally do not work, so it is more desirable to conclude bilateral agreements. In this regard, it should be noted that, in many countries, exclusivity agreements are considered anti-competitive and, therefore, in some cases illegal. It is therefore very wise that you consult with a specialist lawyer without agreement to ensure that the agreement you are going to make is not illegal.
Territory and exclusivity are closely linked, and perhaps the most difficult problems in distribution agreements. Below are a few options for each page to consider. The starting point is that international distribution agreements generally contain details on specific products and the specific area that will be included in the contract. Opt for the Home Court: In some cases, clearly defined „choice of law“ provisions may affect the likelihood of litigation between the parties leading to actual litigation.