Distribution Agreements in Sydney

The supplier of the goods is sometimes also the manufacturer. In some cases, the supplier has entered into an exclusive arrangement with the manufacturer.

As a supplier, you should have a thorough understanding of the goods you provide and their market. The better you know your market, the more you can assist distributors with succeeding in their business. The more successful your distributors become, the more goods they order and the more successful you become yourself.

Our lawyers in Sydney can cater an agreement to clarify your need and ensure that your products and business are well protected. If you are already using a distributor agreement, we can review this to ensure that it covers all relevant legal issues.

Distributors are usually required to invest a significant amount in their distribution process. They will need to fund freight, storage and marking to ensure that their product is demanded by customers. For this reason, the distributor will need to know their product and supplier like the back of their hand.

To ensure that your investment is not wasted, you should have terms of trade that protect your business.

Our lawyers in Sydney have years of experience drafting distribution agreements. They know exactly which matters to consider when drafting these. Some factors to be considered are:

• Agreed products
  • Are distribution rights given for a certain product, or for the full range?
• Price
  • Is there a set price per item?
  • Or does the price depend on the volume ordered?
  • Do any discounts apply?
• Modification of products
  • Is the distributor permitted to alter the product?
• Sub-distributors
  • Are sub- distributors permitted?
  • If so, what conditions apply?
• Territory
  • Is there a defined territory for distribution?
• Sale targets
  • Are there set minimum sales targets?
• Payment terms
  • What are the payment terms?
  • Is security for payment needed?
• Demand forecasting -This is a critical point, which allows the manufacturer to match the demand from the consumers. A delicate balance must be struck between the supplier, the distributor and the consumer demand.
• Exclusivity
  • Is the distributorship exclusive?
  • If so, how long does this exclusivity last?
• Packing, delivery and transit
  • Who is responsible for this?
  • Who pays for this?
  • At what point does the insurance risk pass from the supplier to the distributor?
• Quality Control
  • As a manufacturer, you have a duty to supply goods that are of merchantable quality”.
  • How will quality be managed?
• Intellectual property rights
  • What rights does each party have for the IP in relation to the goods?
  • Will particular branding be used?
• Termination
  • Who can terminate the agreement?
  • How can they terminate the agreement?
• Trial period
  • Is there a trial period?
• Rights that survive the termination of the agreement – There are certain rights that will live on; long after the distributor agreement has been terminated. There will be a run off period where outstanding payment must be made.
• Permitted marketing activities – Some suppliers will require their branding and marketing strategy to be used. Does a particular method of marketing need to be used?

It is imperative to have an experienced distribution agreement lawyer in Sydney for the following reasons:

• It will provide a solid foundation for your business
• A distribution agreement can be complex, and an experienced, professional lawyer can use the perfect wording to ensure that all legal obligations are met
• It will clarify any points of confusion in your agreement
• If you decide to do a DIY agreement and you get it wrong, it can costs your business thousands
• Informal agreements may work initially, but as your business grows, so does the risk involved.
• If the agreement is international, then there are several other issues, which only a highly experienced solicitor will know to consider
• Due diligence is absolutely necessary. Lawyers can undertake the required searches for due diligence
• Addressing issues initially is easier than dealing with huge disputes later on in your business relationship.

Our lawyers in Sydney can help you by providing a well-drafted distribution agreement that addresses any legal issues and clarifies expectations of both parties.

Before we even begin drafting, we will ask you questions that will highlight what particular interests need to be protected.

For more information, call us on 1300 795 893 or fill out the contact form on this page for a confidential chat with one of our shareholder agreement lawyers in Sydney to help you finalise shareholder agreements as soon as possible.