Does Your Distribution Agreement Cover Your Business Needs?

Business Meeting Discussion

It is quite disturbing to learn that some businesses put little importance in a contract’ terms and conditions when entering into a distribution agreement. Sometimes, small companies do not consider that these agreements differ from one company to another. These contracts are necessary because they outline your rights and obligations in that business relationship.

This situation is common between buyers and distributors of self-priming trash pumps, flow meters and other industrial, construction and mining parts. It is crucial that you always review all contracts to avoid getting into legal disagreements with your suppliers and stockists. Additionally, ensure they cover the following critical elements:

Scope

The distribution agreement should define the geographical scope within which the area’s laws permit the distributor to offer their services. It should specify the brands and product lines, too. Also, it should address the extent of inclusion of new brands. You should also confirm whether the agreement highlights if your distributor has exclusive distributorship. Also, check the term in which the contract is valid.

Pricing

A supplier should outline the prices for your products that your distributor is selling. It is essential you also include any terms for resale pricing and highlight whether the distributor can also set resale prices. You should also confirm that the agreement contains payment schedules and penalties for missed payments.

Rights of Parties

Ensure the distribution agreement covers the obligations that each party should play. Consider the responsibilities and duties of each party outlined in the contract, and make sure they follow the law.
If you have business branches in separate states in Australia, you must have noted that the distribution agreements you have entered into are different. Typically, the local distribution laws differ from one state to another. Nonetheless, you should check every contract if you are a wholesaler of industrial, construction and mining equipment.