Distribution Agreement
This Distribution Agreement (the "Agreement") is entered into as of EFFECTIVE DATE (the "Effective Date"), by and between the Supplier and Distributor identified below, for the purpose of establishing the terms and conditions under which the Distributor shall market, promote, and distribute the Supplier's products within the designated territory.
1. IDENTIFICATION OF THE PARTIES
SUPPLIER NAME, with a principal place of business at SUPPLIER ADDRESS, phone: (___) ___-____, email: [email protected], contact person: CONTACT PERSON (hereinafter referred to as the "Supplier"); and
DISTRIBUTOR NAME, with a principal place of business at DISTRIBUTOR ADDRESS, phone: (___) ___-____, email: [email protected], contact person: CONTACT PERSON (hereinafter referred to as the "Distributor").
The Supplier and Distributor are collectively referred to herein as the "Parties" and individually as a "Party."
2. RECITALS
WHEREAS, the Supplier manufactures, produces, or otherwise supplies certain products and desires to expand the distribution of such products within the territory specified herein;
WHEREAS, the Distributor has the experience, resources, and distribution network necessary to effectively market, promote, and distribute the Supplier's products within the designated territory;
NOW, THEREFORE, in consideration of the mutual covenants, promises, and agreements contained herein, and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the Parties agree as follows.
3. APPOINTMENT AND PRODUCTS
The Supplier hereby appoints the Distributor, and the Distributor accepts such appointment, as the Supplier's distributor for the following products (the "Products"): PRODUCT DESCRIPTION. The nature of this appointment shall be EXCLUSIVITY TYPE within the territory described in Section 4 below. In the case of an exclusive appointment, the Supplier shall not appoint any other distributor or sell directly within the territory during the term of this Agreement. In the case of a sole appointment, the Supplier retains the right to sell directly but shall not appoint other distributors.
4. TERRITORY
The Distributor shall have the right to distribute, market, and sell the Products within the following territory (the "Territory"): TERRITORY. The Distributor shall not actively solicit sales or establish any branch, warehouse, or distribution center outside the Territory without the prior written consent of the Supplier.
5. MINIMUM PURCHASE OBLIGATIONS
The Distributor shall meet the following minimum purchase or sales targets: MINIMUM PURCHASE. Failure to meet the minimum purchase obligations for two (2) consecutive periods may, at the Supplier's option, result in conversion of an exclusive arrangement to non-exclusive, reduction of the Territory, or termination of this Agreement upon written notice.
6. PRICING AND PAYMENT
The Distributor shall purchase the Products from the Supplier at prices established by the Supplier from time to time and communicated to the Distributor in writing. The Distributor shall receive a discount or margin of MARGIN/DISCOUNT from the Supplier's standard pricing. Payment for all Products ordered shall be made in accordance with the following terms: PAYMENT TERMS. All prices are exclusive of applicable taxes, duties, and shipping costs, unless otherwise expressly agreed in writing. Overdue payments shall bear interest at a rate of one and one-half percent (1.5%) per month, or the maximum rate permitted by applicable law, whichever is less.
7. TERM AND TERMINATION
This Agreement shall be effective for TERM. Either Party may terminate this Agreement for cause upon sixty (60) days' written notice if the other Party materially breaches any provision of this Agreement and fails to cure such breach within the notice period. Either Party may terminate this Agreement for convenience upon ninety (90) days' written notice to the other Party. Upon termination, the Distributor shall cease all marketing and distribution activities, return any Supplier materials, and pay for all Products delivered and accepted.
8. DISTRIBUTOR OBLIGATIONS
The Distributor shall: (a) use commercially reasonable efforts to promote, market, and distribute the Products throughout the Territory; (b) maintain adequate inventory and storage facilities for the Products; (c) employ qualified sales and technical personnel; (d) comply with all applicable laws and regulations regarding the marketing, sale, and distribution of the Products; (e) not alter, modify, or repackage the Products without the Supplier's prior written consent; and (f) protect and not misuse the Supplier's trademarks, trade names, and intellectual property.
9. SUPPLIER OBLIGATIONS
The Supplier shall: (a) fill accepted orders in a timely manner; (b) provide reasonable marketing materials and product information to the Distributor; (c) notify the Distributor of any changes to the Products, pricing, or availability within a reasonable time; and (d) maintain product quality consistent with the specifications described in this Agreement.
10. INTELLECTUAL PROPERTY
The Supplier retains all right, title, and interest in and to its trademarks, trade names, logos, patents, copyrights, and other intellectual property. The Supplier grants to the Distributor a non-exclusive, non-transferable, revocable license to use the Supplier's trademarks and trade names solely in connection with the marketing and distribution of the Products within the Territory during the term of this Agreement. This license shall terminate automatically upon termination or expiration of this Agreement.
11. DISPUTE RESOLUTION
Any dispute, controversy, or claim arising out of or relating to this Agreement, or the breach, termination, or validity thereof, shall be resolved through DISPUTE METHOD in the State of STATE. Each Party shall bear its own costs and attorney's fees, unless the arbitrator or court awards fees to the prevailing Party.
12. NOTICES
All notices required or permitted under this Agreement shall be in writing and shall be deemed duly given when delivered personally, sent by certified mail (return receipt requested), or sent by nationally recognized overnight courier to the following addresses:
To Supplier: SUPPLIER NAME, SUPPLIER ADDRESS, Email: [email protected], Attn: CONTACT PERSON
To Distributor: DISTRIBUTOR NAME, DISTRIBUTOR ADDRESS, Email: [email protected], Attn: CONTACT PERSON
13. GOVERNING LAW
This Agreement shall be governed by, construed, and enforced in accordance with the laws of the State of STATE, without regard to its conflicts of law principles.
14. SEVERABILITY
If any provision of this Agreement is held by a court of competent jurisdiction to be invalid, illegal, or unenforceable, such provision shall be modified to the minimum extent necessary to make it valid and enforceable, or if such modification is not possible, such provision shall be severed from this Agreement, and the remaining provisions shall continue in full force and effect.
15. ENTIRE AGREEMENT
This Agreement constitutes the entire agreement between the Parties with respect to the distribution of the Products, and supersedes all prior and contemporaneous negotiations, representations, warranties, commitments, offers, contracts, and communications, whether written or oral, relating to the subject matter hereof.
16. AMENDMENTS
This Agreement may not be amended, modified, or supplemented except by a written instrument duly executed by both Parties. No waiver of any provision of this Agreement shall be effective unless made in writing and signed by the waiving Party.
IN WITNESS WHEREOF, the Parties have executed this Distribution Agreement as of the Effective Date first written above, intending to be legally bound hereby.
Name: SUPPLIER NAME
Date: DATE
Name: DISTRIBUTOR NAME
Date: DATE
Party 1
________________
Signature
Date: ________________
Party 2
________________
Signature
Date: ________________
What Is a Distribution Agreement?
A Distribution Agreement in the United States sets out the rights, duties and consideration binding the parties to it.
Distribution agreements operate at the intersection of contract law, commercial law (UCC Article 2 for goods), antitrust law, and in international contexts, trade regulation. The distinction between a distributor and an agent is legally significant: a distributor buys and resells products as a principal, while an agent facilitates sales on behalf of the manufacturer without taking ownership. This distinction affects tax liability (sales tax nexus), product liability exposure, and the applicability of state agent protection statutes.
Antitrust considerations are paramount in distribution agreements. Under the Sherman Act (15 U.S.C. Sections 1-2), vertical restraints such as exclusive territories, resale price restrictions, and tying arrangements are analyzed under the rule of reason. The Supreme Court's decisions in Leegin Creative Leather Products v. PSKS (2007) and Ohio v. American Express Co. (2018) define the current legal framework for permissible vertical distribution restraints. State antitrust laws may impose additional restrictions. A distribution agreement that violates antitrust law is void and unenforceable, and can expose both parties to treble damages under the Clayton Act (15 U.S.C. Section 15).
When Do You Need a Distribution Agreement?
A Distribution Agreement is needed in the following situations: when a manufacturer wants to expand into new geographic markets through established local distributors rather than building a direct sales force; when a food or beverage company engages distributors to deliver products to retail outlets, restaurants, and institutions; when a technology company appoints a value-added reseller (VAR) to sell, install, and support its products; when a pharmaceutical manufacturer distributes products through wholesalers subject to FDA and DEA regulations; and when an international supplier enters the US market through a domestic distribution partner.
Additional scenarios include consumer goods manufacturers engaging distributors for big-box retail channels, industrial equipment manufacturers appointing regional distributors for sales and service, publishing companies distributing books through wholesale distributors, and automotive parts manufacturers distributing through aftermarket distribution networks.
Operating without a written distribution agreement exposes both parties to significant risk. The manufacturer may lose control over how its products are marketed, priced, and serviced. The distributor may invest substantially in building a market only to have the manufacturer terminate the relationship without compensation. Without clear territory definitions, multiple distributors may compete with each other, destroying margins. Product liability claims may be unclear as to which party is responsible. And without written exclusivity terms, the manufacturer may appoint competing distributors or begin selling directly, undermining the distributor's business.
What to Include in Your Distribution Agreement
A complete Distribution Agreement must include the following elements:
Territory and exclusivity -- the geographic area, market segment, or customer channel in which the distributor is authorized to sell. Specify whether the appointment is exclusive (the manufacturer will not appoint other distributors or sell directly in the territory), sole (the manufacturer retains the right to sell directly but will not appoint other distributors), or non-exclusive.
Products covered -- a specific list or description of the products the distributor is authorized to sell, including any restrictions on selling competing products.
Pricing and payment -- wholesale pricing, volume discounts, payment terms (typically net 30-60 days), currency, and the process for price changes. Under antitrust law, the manufacturer may suggest retail prices but generally cannot mandate minimum resale prices in some jurisdictions.
Minimum purchase requirements -- the minimum quantities the distributor must purchase per period to maintain their appointment, with consequences for failure to meet minimums (territory reduction, loss of exclusivity, or termination).
Marketing and promotion -- the distributor's obligations to actively market the products, maintain adequate inventory, participate in trade shows, and comply with the manufacturer's brand guidelines and marketing standards.
Ordering and delivery -- the process for placing orders, lead times, shipping terms (FOB origin, FOB destination, or Incoterms for international agreements), and who bears the risk of loss during transit.
Warranty and returns -- the manufacturer's warranty terms, the distributor's role in handling warranty claims, the return and exchange policy, and who bears the cost of defective product returns.
Intellectual property -- the distributor's limited license to use the manufacturer's trademarks, trade names, and marketing materials, with restrictions on modification and requirements for brand compliance.
Term and termination -- the initial term, renewal provisions, grounds for termination (including failure to meet minimums, breach, insolvency, and change of control), and the required notice period. State distributor protection laws in states like Wisconsin (Fair Dealership Law), Puerto Rico (Law 75), and New Jersey may restrict the manufacturer's ability to terminate without good cause.
Post-termination obligations -- the distributor's obligation to return marketing materials and cease using trademarks, the manufacturer's obligation to repurchase unsold inventory, and the survival of confidentiality and non-compete obligations.
Sources & Citations
Statutory citations link to official government sources.
- Sherman ActUS – Cornell LII
- Clayton ActUS – Cornell LII
Cite this page
Reference this free template in an article, syllabus, or research note:
Forms Legal. (2026). Distribution Agreement (United States) [Legal document template]. Forms Legal. https://forms-legal.com/usa/business/contracts/distribution-agreement
"Distribution Agreement (United States)." Forms Legal, 2026, https://forms-legal.com/usa/business/contracts/distribution-agreement.
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author = {{Forms Legal}},
title = {Distribution Agreement (United States)},
year = {2026},
howpublished = {\url{https://forms-legal.com/usa/business/contracts/distribution-agreement}},
note = {Free legal document template. Based on Uniform Commercial Code (UCC)}
}
Frequently Asked Questions
Minimum resale price maintenance is analyzed under the rule of reason since Leegin (2007). Maximum and suggested prices are generally permissible. Several states still treat RPM as per se illegal.
Yes, under the rule of reason (GTE Sylvania, 1977). However, they must not substantially lessen competition. FTC and DOJ may challenge overly restrictive arrangements.
No federal statute requires compensation to distributors upon termination, unlike the EU. However, some state franchise/dealer protection statutes may apply (e.g., Wisconsin Fair Dealership Law).
Yes. A supplier must not discriminate in price between competing distributors (15 U.S.C. §13). Volume discounts must be cost-justified.
UCC express warranties (§2-313), implied warranty of merchantability (§2-314), and fitness for particular purpose (§2-315). These can be disclaimed with proper language.
Distribution. The distributor buys products outright and resells in their own name at their own risk. An agent acts on behalf of the principal.
The supplier (manufacturer) bears primary product liability. The distributor may also be liable under state strict liability laws. Product liability insurance is essential.
Yes, when properly executed with valid consideration under applicable state and federal law.
Yes, electronic signatures are legally valid under the E-SIGN Act (15 U.S.C. 7001) and the Uniform Electronic Transactions Act (UETA) adopted by most states.
The non-breaching party may seek remedies including compensatory damages, specific performance, injunctive relief, or termination. Remedies vary by state law.
Notarization requirements depend on the document type and state law. While not always required, notarization adds authentication and may be necessary for government filing.
This template is provided for informational purposes only and does not constitute legal advice. Laws vary by jurisdiction and change over time. Consult a qualified attorney for advice specific to your situation.Full disclaimer
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