The success of a company often depends on how well it is able to distribute its products. It is therefore important to prepare a distribution contract that regulates the relationship between the distributor and the supplier. You have a good relationship with your largest reseller customer. You sign a one-page distribution agreement that seems to cover all the important topics. But have you considered the impact of the Trade Practices Act (TPA)? In case of violation of the law, heavy penalties may be imposed. What if the relationship gets stony and you can`t «solve» a problem that wasn`t dealt with properly – or even – in the agreement on one side? Many factors are taken into account in creating a great distribution agreement. Errors in a dealer agreement are almost invisible during the period between a distributor and a manufacturer. Unfortunately, at the end of a distribution partnership, these same mistakes become glaring mistakes. To avoid any problems at the time of termination, the creator of a distribution agreement must ensure that no non-solid clause is inserted and that certain sentences are not omitted. Here`s a checklist of ten common mistakes to avoid when drafting your next distribution agreement. Supplier may provide Distributor with certain confidential or protected information («Confidential Information»).
The Distributor shall not use the Confidential Information unless this is necessary for the exercise of its rights or the fulfilment of its obligations under this Agreement. The Distributor shall also limit its disclosure of confidential information to those who need to know such confidential information in order for the Distributor to fulfil its obligations and enjoy the rights conferred on it by this Agreement. Such persons are informed of the provisions of this section and agree with them and the merchant remains responsible for any unauthorized use or disclosure of confidential information by any of them.