The exclusive distribution agreement is a legal distribution based contract which establishes an exclusive supply distribution relationship between a distributer and a supplier. As per this agreement the distributor (the wholesaler) agrees that he will exclusively deal with supplier for the products specified in the contract. This agreement bounds the distributor to only deal with exclusive suppliers for the supply of certain products.
This agreement forecloses competitors of the supplier from accessing the exclusive distribution and the exclusively developed marketplace, but few agencies view this agreement as a non-lawful agreement as it gives rise to situations where the anti-trust laws see the restrictions applied by this agreement as non-priced vertical restrictions because the agreement establishes exclusive dealing terms between two non-competitor parties which are the distributor and the supplier. But since 1977 it has been established by the courts an exclusive distribution agreement cannot be completely termed as violating the laws, as the terms established by this agreement are not always illegal.
Exclusive Distribution Agreement
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