What is the importance of distributor agreements

Distributor agreements are documents which are legal documents that outline the terms and conditions which make possible a distributor deal. Such a deal is affected between a company and another, where the latter undertakes the responsibility of distributing or making available the products of the former at a commission. There is a scheme of profit sharing which is established after discussions among the concerned parties. Thus, a distributor agreement is extremely important and some of its major importance is as follows:

  • Distributor agreements provide the basic framework for the outlining of the terms and conditions that will be effective in the agreement. Since it is a legal document, it eliminates ambiguity and also makes provision for the legal punishment of the offending party in case of a breach of contract.
  • These agreements also contain crucial information regarding the deal like profit sharing agreement, initial down payments, and penalty to be paid in case of unsold articles or damage to articles. Any area which has the least chance of being contentious must be made part of the distributor agreement so that a consensus can be reached in such a case.
  • Such an agreement also provides the document which will be followed throughout the course of the agreement and the transaction between the two parties. Since it is a legal document, it also ensures that the existence of this agreement is recognized and validate in the eyes of the law.
  • Distributor agreements also ensure that on one party is allowed to dominate in the proceedings. Since the terms and conditions of the agreement are framed only after mutual agreement, it allows for a fair and equitable distribution of power between the concerned parties. It also ensures that the interests of both are safeguarded.

Thus, a distributor agreement must be written carefully and it must be comprehensive and useful as well.

Category: Sample Agreements

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