EXAMPLE OF AGREEMENT BETWEEN AMERICAN EXPORTER
AND FOREIGN DISTRIBUTOR
Following is the text of a standard type agreement made between an American exporting company and the foreign distributor who engages to import and distribute the line of goods in a given territory
THIS AGREEMENT made this ________ date of ____________, 20____, between the __________________________Co., (hereinafter referred to as the company) and __________________________________ (hereinafter referred to as the distributor).
WITNESSETH In consideration of the mutual covenants hereinafter contained and for the purpose of exploiting the sale within _______________ (hereinafter referred to as the territory) of (list products)______________________________________ (hereinafter referred to as the material), as listed in the price sheet and catalogs issued by the company, it is agreed:
SECTION 1 The company will, during the term of this agreement, sell to the distributor and the distributor will purchase from the company material to be resold by the distributor in the territory. The distributor shall devote its best efforts for the adequate exploitation and sale of the material within the territory and shall maintain an organization sufficient therefor.
SECTION 2 The distributor shall not buy, sell, or negotiate for the sale of (1) material for use outside of the territory, nor (2) material of other manufacture that may in any way compete with that of the company without first obtaining the telegraphic or written consent of the company.
SECTION 3 The sale of _________________________________________(list products excluded, if any) not specifically enumerated above is not included within the provision of this agreement.
SECTION 4 The company shall sell the material to the distributor at the prices listed on the price sheets and catalogs currently distributed by the company from time to time, less the discounts authorized thereon (or terms and conditions mutually agreed to). Any material not included in said price sheets or catalogs shall be the subject of special written or telegraphic quotation by the company, on request.
SECTION 5 The distributor shall promptly advise the company whenever special prices, shipping promises, terms, or other conditions are required to enable the distributor to secure business not otherwise obtainable. In such cases, all elements relating thereto shall be agreed to in writing or by telegraph or telex by the company and the distributor before the final closing of the order and shall not be used to establish a precedent.
SECTION 6 Unless otherwise authorized by the company all prices to the distributor shall be a basic FOB, factory, price. CIF quotations and Proforma invoices are available upon request when indications of order size or order quantity are received from the distributor and upon distributor’s request.
(CAUTION: Section 7 is a special situation and may not be pertinent to your company’s situation)
SECTION 7 The company may change or withdraw any prices or discounts at any time by telegraph or written notice. If, prior to the receipt of notice of any such change or withdrawal, the distributor shall have made any tenders based on special quotations furnished by the company or upon price lists, then the company will accept such orders from the distributor in fulfillment of such tenders, provided such orders are received by the company at _______________ in the United States of America within 60 days (a) after the date of such special quotations, or (b) after the date of any notice of a change or withdrawal of any such listed prices or discounts; except that the company reserves the right to make special quotations binding for a less period than 60 days but in such event will so advise the distributor at the time of making said special quotations.
SECTION 8 The company guarantees the material to have the capacity and performance stated in the price lists or catalogs or submitted in its special written quotations, but the distributor shall assume all responsibility with regard to the efficiency and suitability of said material for actual requirements in each instance. The company assumes no contingent liability for failure of material to meet the guarantee. All the material shall be carefully inspected and tested during or upon completion of manufacture, but any special tests required by the distributor may be charged for by the company, extra, at cost.
SECTION 9 The company will refer to the distributor for negotiation on all inquiries for material received from or for the territory, unless other procedure appears advisable, but the company reserves the right, at its option, to negotiate and sell direct to others in the territory. On any such direct sales by the company, the distributor will be compensated by such a commission, if any, as in the judgment of the company may be warranted by the assistance rendered by the distributor and may be justified by the price obtained.
SECTION 10 All orders shall be payable in currency of the U.S.A. with payment terms mutually agreed to by company and distributor. Those could be spelled out if wanted. Examples: (1) irrevocable letter of credit; (2) sight draft, etc.
SECTION 11 The company may take such steps as it considers desirable to promote the sale of the material in the territory, including the right at its option to send company representatives to spend the whole or part of his or their time in the territory.
SECTION 12 The company shall not be responsible or liable for any loss, damage, detention or delay caused by fire, strike, civil or military authority, insurrection or riot, railroad embargoes, lockout, tempest, accident, delay in delivery of material by other parties or by any other cause which is unavoidable or beyond its reasonable control; nor in any event for consequential damages. (other examples could be included as pertinent).
SECTION 13 If the distributor delays the shipment of any order which the company has completed for or on its behalf, payment shall be made therefor by the distributor as though shipment had been made, whereupon the material will be marked as the property of the distributor who shall pay to the company from time to time all storage and insurance charges thereon whiled such material is in the company’s possession.
SECTION 14 The distributor shall not act as the agent for the company under this agreement, nor shall the distributor have any right or power hereunder to act for or to bind the company in any respect or to pledge its credit.
SECTION 15 No licenses are granted or implied by this agreement under any patents owned or controlled by the company or under which the company has any rights, except the right to sell and use material furnished by the company. No rights to manufacture are granted by this agreement.
SECTION 16 Unless cancellation shall be otherwise effected by mutual consent of the parties hereto, this agreement shall be and remain in force from and after the ___________ day of _____________, 20___ until either party gives to the other written notice of its intention to terminate the same on a day to be specified 3 months after the date when said notice is given, whereupon this agreement shall accordingly be terminated; except that if either party shall become insolvent, or if any petition in bankruptcy shall be filed by or against it, or if a receiver or trustee shall be appointed for any part or all of its property, then this agreement may be terminated by the other party upon written notice of its intention to terminate the same on a day to be specified not less than 5 days after the date when said notice is given.
SECTION 17 The rights conferred on the distributor by this agreement are not assignable or transferable without the written consent of the company.
SECTION 18 In the event of any dispute between the parties hereto in any way arising or growing out of this agreement the same shall be referred to three arbitrators, one to be appointed by the distributor, one to be appointed by the company, and a third to be mutually agreed upon by the two arbitrators so appointed. The decision of a majority of the three arbitrators, including the apportionment of the expenses of the arbitrations, shall be final and binding upon the parties hereto. The meetings of such arbitrators shall be held in the city of __________________, ________________ unless it shall be mutually agreed to hold such meetings elsewhere.
SECTION 19 This agreement shall be construed as having been made in and under the laws of the State of __________________ (usually the State of the company) in the United States of America and shall be subject to the construction placed upon it by the courts of such State.
SECTION 20 All notices herein provided for may be given by personal delivery, by registered mail, or by telegraph addressed to the distributor at ____________________, or to the company, in the city of _________________ and State of ___________________, United States of America.
IN WITNESS WHEREOF the parties hereto have caused this agreement to be duly executed the day and year first above written.
*____________________________ Distributor _________________________ (SEAL)
*____________________________ By ______________________________________
*NOTE: If the distributor is a corporation, this agreement should be executed by its president, attested by its secretary, with the corporation seal attached, otherwise there should be two witnesses, who should sign as such, to the distributor’s signature.