Atlas Legal successfully reviewed and improved a Distribution Agreement between an overseas robotics manufacturer and a Korean company, significantly strengthening the distributor’s rights.
Project Overview
We reviewed a distribution agreement between Company X, a large-building cleaning robot manufacturer, and a Korean distributor. The contract involved a minimum annual purchase of 50 units, valued at approximately USD 2 million (approximately KRW 2.6 billion).
Key Contract Improvements
The original contract was a typical supplier-centric agreement containing numerous provisions disadvantageous to the distributor. Our firm conducted a comprehensive analysis of the 17-page contract and proposed improvements to 12 key clauses.
Exclusivity Rights and MOQ Improvements
We added a performance-based exclusivity conversion clause to the non-exclusive provision. The excessive MOQ (50 units annually) was restructured into a gradual increase model (20 units in Year 1, 35 units in Year 2, 50 units in Year 3) to secure a market validation period.
Payment Terms and Pricing Structure
The 100% advance payment requirement was modified to a three-stage split payment structure (30% upon order, 50% upon shipment, 20% after delivery), improving cash flow. We introduced volume-based differential pricing and added a provision securing marketing support funds equivalent to 5% of annual sales.
Termination and Inventory Protection
We removed the supplier’s unilateral termination right (termination without cause with 30 days’ notice). A clause was added requiring the supplier to repurchase inventory at 90% of the supply price upon contract termination, minimizing the distributor’s inventory loss risk.
International Contract Expertise
We comprehensively reviewed complex legal issues unique to international contracts, including Incoterms (international trade terms), choice of law, international arbitration clauses, and intellectual property licensing scope, creating a contract structure that minimizes business risks and maximizes profitability for our client.