Navigating an Exclusive Distribution Agreement

Navigating an Exclusive Distribution Agreement

Sector: Packaging Manufacturing

The Legal Need:

Our client, a British company based in London, deals primarily with the sale of motorcycles spare parts. We were instructed by the client on their appointment as a distributor of tyres in the United Kingdom and Republic of Ireland. The agreement was for an initial period of 3 years with a supplier based in Thailand. There were several complex cross border elements which needed introducing into the agreement.

Our Expertise:

Under our advice, the client negotiated that the agreement was drafted to give them exclusivity within the regions of the United Kingdom and the Republic of Ireland. To further protect our client’s interests, we advised on wording specifying that not only did our client have exclusivity, but that the supplier company were not permitted to sell the products directly into the United Kingdom and Republic of Ireland. We also included provisions within the distribution agreement that the supplier should specify that their other distributors in nearby jurisdictions, such as France, must ensure their own customers could not resell products in United Kingdom and Republic of Ireland. These amendments were designed to fully safeguard our clients, maintaining full exclusivity in their selling of their product across the two countries.

To further protect the interest of our Client, we advised them to put a fallback in place whereby, if they for any reason failed to place their required minimum order quantity for the year, they could carry forward excess purchases above the minimum quantity from the previous year to make up numbers. We also included specific provisions in the distribution agreement, requiring the supplier to provide a specific level of support to our Client in the fitting and use of the tyres.

In addition to completing the distribution agreement, we prepared the terms and conditions of sale for the sale of the goods from the supplier to our client, which was then incorporated as a schedule within the distribution agreement.

The Outcome:

The client was pleased with the outcome, as we successfully implemented their needs within the documentation produced, and throughout the process ensured that they were constantly safeguarded and received the best possible outcome.