Distribution agreement
An agreement whereby a supplier entrusts a distributor with the marketing of its products within a defined territory.
A distribution agreement is a framework agreement whereby a supplier entrusts an independent distributor with the marketing of its products within a defined geographical territory. The distributor purchases products in their own name and resells them to their customers.
Essential clauses include:
- Territory: geographical area granted, exclusive or non-exclusive
- Products: range, pricing conditions, margins
- Sales targets: minimum purchase or sales quotas
- Distributor's obligations: minimum stock, after-sales service, reporting
- Supplier's obligations: supply, training, marketing support
- Duration and termination: reasonable notice period, end-of-contract indemnity
- Intellectual property: trademark use, image rights
In the EU, distribution agreements are subject to competition law (Vertical Block Exemption Regulation 2022/720). Competition restrictions (imposed prices, territorial partitioning) are strictly regulated.
Unlike commercial agents, distributors generally have no right to an end-of-contract indemnity under most legal systems, unless economic dependence is demonstrated.