A distribution agreement, is a contract between channel partners (i.e. members of the supply chain) that stipulates the responsibilities of both parties. The agreement is usually between a manufacturer (who manufactures the good) and a distributor (who connects the manufacturer and the vendor) but in some cases may involve two distributors or a distributor and a vendor (who buys items and products in bulk and then sells them to customers according to their specifications).
The basic elements of a distribution agreement include the term (i.e. time period for which the contract is in effect), terms and conditions of supply (such as provisions about orders, delivery and payment), and the sales territories (i.e. the geographical location) covered by the agreement. The manufacturer or vendor must also determine whether the distribution agreement will be exclusive (the distributor is the sole distributor of the product) or non-exclusive (it allows distributors to operate alongside other distributors).
KEY VOCABULARY
channel partner
distributor
exclusive
in bulk
manufacturer
non-exclusive
provision
sales territories
sole
to stipulate
to supply
term
terms and conditions of supply
vendor
