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How to make a Distribution agreement

A distribution agreement is an agreement between a supplier of goods and an independent distributor. The distributor is appointed to market the goods and is required to purchase the goods and trade under their own name. The agreement sets out the products to be sold and the distributor's sales targets as well as the conditions under which such distribution can be executed.

Expand the market area of your products by appointing a distributor using this distribution agreement. This distributor agreement sets out the products to be sold and the distributor's sales targets. You can decide whether you want the distributor to be the only seller or one of many in a specific area. You can also specify which markets or geographical areas the distributor will operate, and when and how the agreement can be terminated.

This distribution agreement covers:

  • the basis of appointment (exclusive, sole or non-exclusive distributor)

  • the geographical area(s)

  • the duties of distributor and supplier

  • the minimum purchase targets

  • the price payable by distributor

  • ending the agreement

Use this distribution agreement:

  • to appoint an independent distributor who buys your products and resells them in a defined geographical area

  • to expand the market for your products

  • to ensure you have a well-run distribution network in place

You need a distribution agreement if you want to expand your business into new markets or territories and you want to ensure that you have in place a well-run distribution network.

An exclusive distributor is appointed to be the only distributor in the chosen territory and the supplier cannot make sales in that territory.

A sole distributor is the only distributor in a chosen territory and the supplier can make sales in that territory.

A non-exclusive distributor is not exclusive or the sole distributor. This means that the supplier can make sales and appoint other distributors in the designated territory.

You can restrict the distributor from selling in areas that a supplier has reserved for itself or an exclusive distributor. In this document, you can choose to restrict the distributor engaging in competing business during the life of this agreement and for a period after the end of it.

Under this agreement, a distributor must:

  • maintain adequate insurance
  • purchase a minimum amount from the supplier
  • act in a good faith
  • promote the products of the supplier with due care and diligence
  • not engage in selling similar goods to those of the supplier's products

A distributor will only be responsible for any loss or damage to the products after the products are delivered to them.

Prices for products can be attached in a schedule specified in an attached document to the printed agreement.

You can terminate this agreement:

  • by giving notice. You can choose the termination notice period. You can also choose to set a 'lock-in period' during which no termination notice can be given.
  • immediately, if the supplier or the distributor fails to remedy a material breach within a specified amount of time. A material breach occurs if there is a breach of the agreement that is not trivial and has a serious effect on the benefit that the innocent party would have otherwise derived from the contract. What is material will vary depending on the circumstances.
  • If the distributor fails to achieve the minimum sales targets. You can specify in this document the notice period for the termination in such circumstances.

Ask a lawyer for:

  • appointing a distributor to sell services or mixed goods and services
  • appointing a franchisor who has a licence to offer products
  • for any questions relating to competition law, or if you are unsure about competition law

This distribution agreement is governed by the law of England and Wales or the law of Scotland.

This document contains complex competition law elements. If you are in doubt whether you are complying with competition law, Ask a lawyer.

Other names for Distribution agreement

Distribution contract agreement.