Atlas Legal provided advisory services for drafting an exclusive distributor agreement for a company preparing to enter overseas markets. Here is a comprehensive summary of key clauses and practical checklist.
Advisory Overview
The advisory covered all essential matters that manufacturing companies must review when entering into exclusive distributor agreements with local distributors in European, Southeast Asian, and other overseas markets. Based on Atlas Legal’s experience in drafting contracts for a medical device manufacturer’s European expansion, the advisory incorporated field-tested clauses in detail.
Exclusivity Design and Consideration Structure
Exclusive sales rights clauses must clearly define the contract products, territory scope, and specific content of exclusivity. The Exclusivity Fee should be structured for quarterly payment, while the Minimum Purchase Amount serves as grounds for exclusivity revocation if the distributor fails to achieve 80% of the target.
Manufacturer and Distributor Obligations
Manufacturers bear obligations for technical support, marketing materials provision, and stable supply. Distributors must implement annual marketing plans, attend at least one trade show monthly, refrain from handling competing products, and comply with brand guidelines. Balanced allocation of these obligations is essential for successful partnerships.
Warranty and Trademark Rights
Warranty clauses should specifically address warranty period, coverage, exclusions, and claim procedures. Trademark usage clauses must include non-exclusive license grant, prior approval requirements, prohibition on trademark registration, and obligation to cease use upon contract termination.
Termination and Dispute Resolution
Termination grounds should specifically enumerate payment default, material breach, and bankruptcy. Inventory disposition upon termination typically includes EXW price buyback options. Arbitration is recommended for dispute resolution considering ease of enforcement under the New York Convention.
Legal Expertise
Atlas Legal possesses extensive experience in drafting international contracts including overseas distribution agreements, joint venture agreements, and technology transfer agreements across medical devices, manufacturing, and IT sectors. The firm specializes in designing contracts that preemptively prevent legal risks in international transactions and protect client interests.