Distribution agreement

DISTRIBUTION AGREEMENT

This distribution agreement (hereinafter the "Agreement") is entered into in [City where the contract is signed] on [Contract date] between the following parties:

1. PARTIES

1.1 Manufacturer:
[Manufacturer/supplier company]
Registry code: [Manufacturer/supplier registry code]
Address: [Manufacturer/supplier address]
Representative: [Manufacturer/supplier representative]
Contact: [Manufacturer/supplier contact]
(hereinafter the "Manufacturer")

1.2 Distributor:
[Distributor company]
Registry code: [Distributor registry code]
Address: [Distributor address]
Representative: [Distributor representative]
Contact: [Distributor contact]
(hereinafter the "Distributor")

2. APPOINTMENT AND PRODUCTS

2.1 The Manufacturer appoints the Distributor to resell the following products (hereinafter the "Products"): [Description of the products].

2.2 The Agreement covers the following product categories: [Product categories].

3. LEGAL STATUS OF THE DISTRIBUTOR

3.1 The Distributor purchases the Products from the Manufacturer and resells them in its own name, for its own account and at its own risk, and acts as an independent entrepreneur in relation to both the Manufacturer and customers. The Distributor is not an agent or representative of the Manufacturer and has no right to enter into transactions or assume obligations on behalf of the Manufacturer.

3.2 The provisions on agency contracts (Law of Obligations Act (VÕS) § 670–691) do not apply to the relationship between the Parties, unless otherwise provided by law.

4. TERRITORY AND EXCLUSIVITY

4.1 The resale right granted to the Distributor applies in the following territory: [Territory]. Type of exclusivity: [Type of exclusivity].

4.2 The Manufacturer shall not sell the products directly in the territory or appoint other distributors for the territory.

4.3 Passive sales by the Distributor (fulfilling orders from outside the territory at the customer's own initiative, without targeted advertising) may not be prohibited entirely; active sales by the Distributor (targeted advertising or sales activity outside the territory) may be restricted to a limited extent.

4.4 The Parties shall not apply under the Agreement any restrictions which are prohibited under competition law, including Article 101 of the Treaty on the Functioning of the European Union. Commission Regulation (EU) 2022/720 applies to vertical agreements.

5. WHOLESALE PRICE AND PURCHASE TERMS

5.1 Wholesale pricing method: [Wholesale pricing]. Terms of payment: [Terms of payment].

5.2 The Distributor is subject to a minimum purchase obligation of [Minimum annual purchase volume (€)] euros per year. Consequence if the minimum is not met: [Consequence if the minimum is not met].

5.3 The Distributor shall submit orders in writing or in a form which can be reproduced in writing. An order is deemed accepted once the Manufacturer has confirmed it; the Manufacturer shall confirm the order or give notice of its refusal within a reasonable time.

5.4 The place of delivery, delivery time and other terms of delivery shall be agreed in the order; in the case of cross-border delivery, the Parties may refer to the Incoterms delivery terms. In the absence of agreement, the risk of accidental destruction of and damage to the Products shall pass to the Distributor upon delivery of the Products (VÕS § 214).

5.5 Ownership of the Products shall pass to the Distributor upon payment for them in full (retention of ownership, VÕS § 233). The Distributor has the right to resell Products subject to retention of ownership in the ordinary course of business.

5.6 The Distributor shall examine the Products without delay after receiving them and shall notify the Manufacturer of any lack of conformity within a reasonable time, describing it with sufficient precision (VÕS § 219–220).

6. RESALE PRICE

6.1 The Distributor shall determine the resale price of the goods independently of the Manufacturer and on its own. The Manufacturer may provide a recommended price list but may not impose on the Distributor a binding minimum or fixed resale price.

6.2 The Manufacturer shall not influence the Distributor, even indirectly, to apply a fixed or minimum resale price, for example by linking discounts, deliveries or other terms to the resale price.

7. MARKETING AND BRAND

7.1 Marketing obligation: [Marketing obligation]. The Distributor has the right to use the Manufacturer's trademarks and logos in marketing in accordance with the Manufacturer's brand guidelines; marketing materials shall be agreed with the Manufacturer in advance. Modification of the product or its packaging is not permitted.

7.2 The Distributor is subject to a minimum stock requirement: [Description of the minimum stock].

7.3 Frequency of the Distributor's sales reports to the Manufacturer: [Reporting frequency]. The report shall contain at least the quantities of Products sold, the stock level and material customer complaints.

7.4 The Distributor shall use the Manufacturer's trademarks, business names and other designations solely for identifying and advertising the Products in the territory during the term of the Agreement. No intellectual property rights pass to the Distributor under the Agreement. The Distributor shall not register trademarks or domain names that are confusingly similar to the Manufacturer's designations.

8. QUALITY AND AFTER-SALES SERVICE

8.1 Handling of warranty matters: [Handling of warranty matters]. The Manufacturer is liable for product defects in accordance with the general principles of product liability.

8.2 Use of sub-distributors and resellers: [Use of sub-distributors/resellers].

8.3 The Manufacturer confirms that, upon delivery, the Products conform to the terms of the Agreement and to the product safety and labelling requirements in force in the territory.

8.4 The Distributor shall immediately notify the Manufacturer of any hazards related to the Products and of material customer complaints, and shall cooperate with the Manufacturer in the event of a recall of the Products.

9. COMPETITION

9.1 Sale of competing products during the term of the Agreement: [Competing products during the term of the agreement]. The non-compete restriction shall apply for [Non-compete after termination of the agreement (months)] months after the termination of the Agreement.

9.2 If the sale of competing products is prohibited during the term of the Agreement, the prohibition shall apply for no longer than five years from the entry into force of the Agreement, unless the Parties expressly agree to extend it (Regulation (EU) 2022/720). A non-compete restriction applicable after the termination of the Agreement applies only to the extent permitted under competition law.

10. CONFIDENTIALITY AND LIABILITY

10.1 Prices, volumes, customer data and business strategy are confidential. A Party shall not disclose them to third parties, except in the cases provided by legislation, and this obligation continues to apply after the termination of the Agreement.

10.2 The Manufacturer is liable for product defects; the Distributor is liable for errors in the storage and handling of the goods.

10.3 A Party shall be liable for breach of obligations arising from the Agreement, unless the breach is excusable (VÕS § 103). The injured Party has the right to claim compensation for both direct patrimonial damage and loss of profit (VÕS § 128).

11. FORCE MAJEURE

11.1 Neither Party shall be liable for a breach of an obligation if the breach was caused by force majeure (a circumstance which the Party could not influence or foresee).

11.2 A Party whose performance of an obligation is prevented by force majeure shall notify the other Party thereof immediately. If the effect of force majeure is temporary, the breach is excusable only for the duration thereof (VÕS § 103), and the time limits arising from the Agreement shall be extended by the corresponding period.

12. NOTICES

12.1 Notices related to the Agreement which have legal consequences shall be given to the other Party in writing or in a form which can be reproduced in writing (including by e-mail) at the contact details specified in clause 1 or at other details which the Party has notified to the other Party in writing.

12.2 Notices of a purely informative nature may also be communicated by telephone. A Party shall notify the other Party of any change in its contact details without delay.

13. TERM AND TERMINATION OF THE AGREEMENT

13.1 Term of the Agreement: [Term of the agreement] ([Term in years] years). Notice period for ordinary cancellation: [Notice period for cancellation].

13.2 The Agreement may be cancelled extraordinarily in the event of persistent failure to meet the minimum purchase obligation, insolvency, a material breach or a breach of competition law. If the reason for cancellation is a breach of an obligation, the Agreement may be cancelled after the expiry, without result, of a reasonable time limit granted for ending the breach, except in the cases provided by law (VÕS § 196).

13.3 Unsold stock upon termination of the Agreement: [Unsold stock upon termination of the agreement].

13.4 Upon termination of the Agreement, the Distributor shall cease using the Manufacturer's designations and shall return marketing materials and samples to the Manufacturer. If the stock remains with the Distributor, the Distributor may sell it off in the ordinary manner using the designations. Termination of the Agreement does not affect payment and other obligations which arose before termination.

14. DISPUTE RESOLUTION

14.1 Disputes arising from this Agreement shall be resolved primarily through negotiations and, failing agreement, as follows: [Dispute resolution].

14.2 The Agreement is governed by the law of [Governing law].

15. FINAL PROVISIONS

15.1 Amendments and supplements to the Agreement shall be made in writing or in a form which can be reproduced in writing and shall enter into force once both Parties have confirmed them.

15.2 A Party may not transfer the rights and obligations arising from the Agreement to a third party without the prior written consent of the other Party.

15.3 If any provision of the Agreement is or becomes invalid, this shall not affect the validity of the remaining provisions. The Parties shall replace the invalid provision with a valid one which is as close as possible to it in its economic substance.

15.4 The Agreement (together with its annexes) constitutes the entire agreement between the Parties and supersedes all prior oral and written agreements relating to the subject matter of the Agreement. The Agreement enters into force once both Parties have signed it.

16. LEGAL BASIS

16.1 This distribution agreement is subject to the general part of the Law of Obligations Act (freedom of contract), and the requirement of free determination of the resale price arises from § 4 of the Competition Act. As regards vertical agreements, Commission Regulation (EU) 2022/720 applies.