What Is an International Reseller Agreement?
An international reseller agreement authorizes an intermediary who may be an individual or a distributor company to resell the goods in the international markets. The vendor may be a manufacturer or a trader who trades in the goods. In that case, the distributor would become a sub-trader who deals in the goods the trader already deals in.
When Do You Need an International Reseller Agreement?
This agreement is drafted when a trader or a manufacturer wants to expand his markets. However, the trader does not have enough network or market reach to sell in larger markets. In that case, he employs the help of a distributor to sell the goods on his behalf in the international markets. This way, the trader doesn’t have to directly interact with the customers but can be assured that his goods will be sold. This agreement is generally used for software-based products.
Inclusions in the International Reseller Agreement
A standard international reseller agreement template contains the following terms
- The rights and obligations of the vendor and the reseller
- The nature of the contract — whether it is exclusive and whether the rights are transferable or not
- The restrictions placed on the reseller with regard to sale of the products where such sale is prohibited by the local laws — this includes regions within the country where the sale of such products is prohibited
- The payment terms and the mode of payment by the reseller
- The details of the purchase orders and how they should be placed
- Whether licensing for bulk products can be obtained from the reseller or should be obtained from the trader
- Details of returns and exchange, and who bears the cost of such returns
- Liability of damaged goods in transit to the reseller and to the customer
- The rights of the reseller to obtain the newly updated products after they have been realized and the time period within which it has to be released
- Minimum advertised price
- Governing laws
- Termination clauses and recourse available to the injured party
How to Draft an International Reseller Agreement?
When you’re drafting this agreement, it always helps to take a look at the reseller agreement sample. The things to remember when drafting an agreement are
- The prices that would be offered to the reseller and the price that the reseller would sell to the customers
- The appointments of the reseller and the covenants, representations and warranties by the reseller
- What responsibilities are the exclusive liability of the reseller for which the trader does not take responsibility, but amounts to breach of contract
- The nature of the relationship between the trader and the distributor — whether they are in an agent-principal relationship or whether the distributor is an independent contractor.
- The ownership and the proprietary rights over the products that are offered to the distributor
- Trademarks and service marks that would be left on the products for sale
- Warranty on the product and the limitation of the warranty and which part of the warranty is the responsibility of the distributor and which part is of the trader
- Indemnity clauses by the distributor for any damages caused to the trader
- Details of the advertising
- Details of assignments and whether such assignments and sub-licensing is allowed
- Revisions in the prices
- Details of payments, raising invoices, and payment of taxes
- Responsibility of the risk of loss
Benefits of the International Reseller Agreement
The following are the benefits and drawbacks of this agreement:
- It creates a framework for the reselling of the products by the reseller.
- The responsibilities of the reseller are clearly laid out.
- It allows the trader to reach larger markets
- It increases the revenue for the trader
- The distributor can use the trader’s name and trademark and be associated with the brand
- The goods can be tailored to suit the local markets
- Better capacity utilization for the trader
Key Terms in the International Reseller Agreement
The key terms in an agreement are as follows:
- Term of the agreement
- Appointment of reseller
- Responsibilities of the reseller
- Termination clause
What Happens in Case of Violation?
In case the terms of the agreement are breached by any party thereto, the other party can serve a notice on the breaching party. Such breach may include violation of any obligation, covenant or international reseller agreement representation. If the breaching party fails to cure the breach within a certain period of time, the agreement can be terminated.
A reseller agreement is a great way for the trader and the reseller to establish good business relations that are mutually beneficial for each other. However, when drafting the agreement, it is important to understand the mutual obligations and the expectations from the agreement.
Sample for International Reseller Agreement
A sample of the agreement can be downloaded from below.
Download this USA Attorney made original Agreement for only $9.99