Distributor Protection Agreement

  • Dicembre 07, 2020

A preliminary analysis and a complete understanding (both legal and commercial) of the identity of the intended distributor are of great importance. First, the distributor could be a link in a larger distribution chain; Distributor owners may operate directly or through related/related companies in other jurisdictions and markets. Consideration should be given to the distributor`s financial strength and technical capabilities in the relevant field and field. The number of years the distributor has worked in the territory and its past performance should generally be examined in the course of its activities with the producer/supplier`s direct competitors. The agreement can thus, after receiving a complete picture of the dynamics of the potential distributor, put in place legal mechanisms to respond to the way in which the distributor is likely to operate in the relationship with the current producer/supplier. In this way, an image of the operating methods of the distributor and that of its owners can also be created and duly processed as part of the agreement. Include a specific sales volume requirement and characterize the distributor`s non-compliance with this volume as a substantial violation of the distribution contract. An Israeli distributor usually faces a long distance before being designated as an exclusive distributor for a foreign supplier in Israel. When it comes to distributing products with a large market share and sales volume, the foreign supplier will almost always consider several candidates and distribution options before choosing the exclusive local distributor for its products. When a draft distribution contract is finally submitted to the selected exclusive distributor, it is informed that it is a “typical agreement” and that it is merely scribbling its signature. At this point, the distributor is required to sign the contract immediately without negotiation, in order to satisfy the supplier and to avoid being called a disruptor from the beginning of the business relationship. However, several exclusive distribution agreement issues are essential for an exclusive distributor, so it is advisable for the distributor to carefully consider the contractual terms proposed to it and do not hesitate, if necessary, to negotiate with the supplier in the first place with regard to the following substantive issues.