What Is Sole Distributor Agreement

There are many ways to fit into these types of agreements. An exclusive distribution contract or exclusive distribution contract is entered into when the supplier or manufacturer uses only one distribution company in a given territory. This does not prevent the manufacturer from selling its own products directly in this region through its own accounts; it limits only distributors with which the supplier works to a single company. Often, this type of agreement expects the distributor to work exclusively with them and not sell or sell to competitors with the same type of products. From there, the company must examine its markets, pricing and position and decide whether the benefits of a single or exclusive distribution agreement are reasonable for the products it produces and for the business it carries out. A distributor is a dealer. The distributor makes a surcharge on the resold products, and the distributor shares a large part of the risk in the products, i.e. their quality. These types of distribution agreements remain legal, not least because the trade agreement is between non-competitors, the manufacturer and the distributor. While these agreements are not inherently illegal, they may become illegal if they begin to influence the market landscape in a way that creates monopolies or reduces competition. For example, agreements that attempt to manipulate or impose the market landscape through price fixing, limited production or discriminatory perception of different prices are almost always considered illegal by antitrust courts. Since both parties are equally invested in product success, better performance can be expected.

However, this type of agreement may require a lot of manpower and both parties` expectations will be high. Restrictions imposed by exclusive distribution agreements are generally favourable to competition. For example: a. Subject to the terms of this exclusive distribution agreement, the supplier appoints the distributor and the distributor accepts such a designation and undertakes to act as the exclusive distributor of supplier products (defined below) in the following geographical area (the „territory“): for manufacturers, the main advantage is to be able to bring expertise to the Point of Sale so that they can instead concentrate their resources within.

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