A distribution agreement is a document that is prepared, generally by a manufacturer or producer of certain goods or services, and given to a supplier who would take up the task of distributing the particular product or service. It is a simple yet very important document that keeps a record of all the terms and conditions that are applicable in this particular contract.
The agreement involves details of the locations where the goods are to be supplied, various procedures of supply, methods to augment supplies, etc. It is a mutual contract signed between the manufacturer and the supplier, wherein the latter promises to deliver the said list of services in exchange of a certain sum of money, the exact figure of which is to be included herein.
Distribution agreements are generally simple in form, but should necessarily include the basic details of contract. This type of an agreement can be prepared at any level of the corporate sector, that is, by both small and large companies, business firms and other profit-making organizations.
The proper supply of products and services is the most essential factor for gaining profits and market shares and enhancing customer satisfaction levels to help prosper more; hence, the distribution agreement is crucial for any manufacturing company as it places the responsibility of distributing the goods or services on a certain supplier or some supply agency. The following points are to be carefully noted while framing a distribution agreement:
- The name and identification details of the distributor are perhaps the most important detail to be included in the distribution agreement. The manufacturer should have a clear record of the same to ensure that he can track the respective person or company at any instant.
- The term of the agreement has to be included, as in all cases. The exact dates and the term of validity should be mentioned clearly.
- A distribution agreement needs to include specific details of the involved payments and amounts involved in the contract. It is essential to state the dates of payment and installment amounts, to keep a record of the same.
- It is important to agree on the term for which the supplier would work at the given rates and a separate clause should specify this in the distribution agreement. Also, the distribution ports, equipments and techniques implemented and costs involved should also be accounted for.
- The entire process of distribution is a task being given to the distributor, and hence the profits so generated will be his share as well. The exact share of profit(1), whatsoever be the proportion, will have to be mentioned clearly in the distribution agreement.
- Signatures of the involved parties, advocates and witnesses form an important part of distribution agreements.