Exclusive distribution agreement

This is our exclusive distribution agreement template, incorporating:

• framework terms regarding the grant of the distributorship; and
• specific terms concerning the sale of products by the supplier to the distributor.

It is designed to be used in relation to exclusive distribution deals, where the exclusive territory of the distributor is within the UK or EU.

This document was designed to assist the parties in complying with EU and UK competition laws, which have a significant effect upon the structuring of distribution deals within those territories. It has been updated to account for the changes to the block exemption regime law introduced on 1 June 2010 by Commission Regulation (EU) No 330/2010 on the application of Article 101(3) of the Treaty on the Functioning of the European Union to categories of vertical agreements and concerted practices.

The template comes in two forms: standard and premium. The premium form includes all the provisions of the standard document, as well as clauses dealing with:

• distributor indemnity;
• publicity;
• after-sales support;
• forecasting; and
• trade mark licensing.

See also our non-exclusive distribution agreement.

This agreement would need expert adaptation for use in relation to selective distribution agreements or exclusive distribution agreements relating to motor vehicles, which are subject to special legal rules.

Non-exclusive distribution agreement contents

1. Definitions
2. Term
3. Exclusive distributorship
4. Distributor obligations
5. Supplier obligations
6. Order procedure
7. Forecasting (premium only)
8. Minimum Quantity
9. After-sales support (premium only)
10. No assignment of Intellectual Property Rights
11. Licence of Supplier Trade Marks (premium only)
12. Change control (premium only)
13. Charges
14. Payments
15. Confidentiality obligations
16. Publicity (premium only)
17. Warranties
18. Distributor indemnity (premium only)
19. Supplier Indemnity
20. Force Majeure Event
21. Effects of termination
22. Notices
23. Anti-corruption
24. Anti-slavery
25. Anti-tax evasion (premium only)
26. Assignment (part of "General" clause in standard version)
27. No waivers (part of "General" clause in standard version)
28. Severability (part of "General" clause in standard version)
29. Third party rights (part of "General" clause in standard version)
30. Variation (part of "General" clause in standard version)
31. Entire agreement (part of "General" clause in standard version)
32. Law and jurisdiction (part of "General" clause in standard version)
33. Interpretation

Does the agreement allow for expiry after a particular period of time?

Yes. The term of the agreement may be either indefinite or for a defined period (eg 5 years following execution). In either case, a minimum term may be defined, and rights to terminate "for convenience" may be restricted so that they only apply after the end of the minimum term.

If a defined term is used, you may wish to remove the right to terminate for convenience.

In any case, there are various rights to terminate if the contract is breached by the other party or the other party becomes insolvent, which will apply irrespective of the minimum term.

Does this document take account of the situation where products will be collected by the distributor from the warehouse of the supplier?

One of the suggested delivery clauses allows that products may be collected. In that case, the distributor is responsible for the safe loading and transport of the products, and for all associated costs. Risk in the products passes to the distributor upon collection of the products.

What sort of performance obligations are included in the agreement?

The performance obligations clause is very straightforward. The distributor is obliged to purchase a certain minimum quantity of products during each year of the agreement (or some other defined period).

The premium template includes a trade mark licence. What, if anything, does it do to prevent the distributor gaining rights in the trade marks?

A specific clause is included to deal with this potential problem. It provides that all goodwill and other rights in the licensed trade marks  belong to the supplier, and further that the distributor has to do everything reasonably within its power to ensure that all those rights vest in the supplier.

In addition, the distributor is prohibited from registering in the territory any trade mark that is similar or identical to the licensed trade marks.

If the distributor is late in paying for products, can the supplier charge interest?

Yes. The suggested clause references the right to claim under UK late payments legislation, but there is also a contractual right to claim interest - useful where the UK legislation does not apply.

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A copy of this exclusive distribution agreement is included in the following pack:

• Sale of goods pack (both standard and premium versions of the document)