Simply developing a good product does not guarantee the commercial success of a business; marketing that product is the key to success.

A business that wishes to market a product in a vast territory can use the services of any number of national or regional distributors. In such a case, the distributor is both the buyer and seller of the products and is responsible for marketing the products through its distribution network.

This document establishes the main components of the legal and financial framework of such a transaction.

We recommend using this template when a manufacturer wishes puts in place different distribution channels to ensure a wider distribution of its products, which requires goods to follow different channels towards a number of outlets. Using a distributor allows a manufacturer to achieve faster market penetration, and to benefit from the latter’s warehousing and distribution facilities.

If selling internationally, we recommend also consulting our international sale of merchandise agreement template (K07250). If the products can be distributed without requiring significant shipping to multiple outlets, it may be more advantageous for the manufacturer to use the services of a manufacturer's agent (see template K01200) and deliver its products itself.

0.00 INTERPRETATION
0.01 Definitions
0.01.01 Activities
0.01.02 Agreement
0.01.03 Best Efforts
0.01.04 Breach
0.01.05 Change in Control
0.01.06 Client
0.01.07 Confidential Information
0.01.08 Distribution
0.01.09 Encumber or Encumbrance
0.01.10 Event of Default
0.01.11 Force Majeure
0.01.12 Fundamental Provisions
0.01.13 Industrial Property
0.01.14 Intellectual Property
0.01.15 Law
0.01.16 Legal Representatives
0.01.17 Order
0.01.18 Ordinary Course of Business
0.01.19 PARTY
0.01.20 Person
0.01.21 Prime Rate
0.01.22 Products
0.01.23 Related Person
0.01.24 Replacement Parts
0.01.25 Territory
0.01.26 Trademark
0.02 Precedence
0.03 Jurisdiction
0.03.01 Governing Law
0.03.02 Non-Compliance
a) Severability
b) Substitute Provision
0.04 Miscellaneous
0.04.01 Cumulative Rights
0.04.02 Days and Time
a) Time of the Essence
b) Computation of Time
c) Delays
0.04.03 Financial References
0.04.04 Cross-References
0.04.05 Gender and Number
0.04.06 Headings
0.04.07 Presumptions
0.04.08 Knowledge
0.04.09 Approval
0.04.10 Accounting Standards
1.00 PURPOSE
1.01 Granting of Distribution Rights
1.02 Conditions
1.02.01 Required by MANUFACTURER
1.02.02 Required by DISTRIBUTOR
1.02.03 Election
2.00 CONSIDERATION
2.01 Price List
2.01.01 Periodical Price Revision
2.01.02 Price Revision Before Planned Revision
2.01.03 Limitation to Right to Modify
2.01.04 Previous Orders
2.01.05 Updating Price List Schedule
2.02 Compensation of DISTRIBUTOR
2.03 Revision of DISTRIBUTOR’s Compensation
3.00 TERMS OF PAYMENT
3.01 Payment for Products
3.01.01 Payment Due Date
3.01.02 Retaining Ownership
3.02 Allocation of Payments
3.03 Waiver of Compensation
3.04 Extension and Credit
3.05 Payment by Certified Cheque
3.06 Interest
3.07 Loss of Term
3.08 Indemnity
4.00 SECURITY
4.01 In favour of MANUFACTURER
4.02 In favour of DISTRIBUTOR
4.03 Suretyship
4.03.01 Right of MANUFACTURER
5.00 MUTUAL REPRESENTATIONS AND WARRANTIES
5.01 Status
5.02 Authority
5.03 Binding Agreement
5.04 Canadian Resident
5.05 Commission
5.06 Insurance
5.07 Nominee
5.08 Fundamental Provisions
5.09 Disclosure
5.10 Legal Proceedings
6.00 REPRESENTATIONS AND WARRANTIES OF MANUFACTURER
6.01 Status
6.02 Authority
6.03 Binding Agreement
6.04 Canadian Resident
6.05 Commission
6.06 Insurance
6.07 Nominee
6.08 Fundamental Provisions
6.09 Disclosure
6.10 Legal Proceedings
6.11 Compliance with Legislation
6.12 Quality and Safety
6.13 Supply of Products
6.14 Intellectual Property
6.15 Trademark
6.15.01 Ownership
6.15.02 Registration (if applicable)
6.16 Granted Rights
7.00 REPRESENTATIONS AND WARRANTIES OF DISTRIBUTOR
7.01 Status
7.02 Authority
7.03 Binding Agreement
7.04 Canadian Resident
7.05 Commission
7.06 Insurance
7.07 Nominee
7.08 Fundamental Provisions
7.09 Disclosure
7.10 Legal Proceedings
7.11 Resources
7.12 Competition
8.00 MUTUAL DUTIES AND OBLIGATIONS
8.01 Confidential Information
8.01.01 Undertaking
8.01.02 End of Agreement
8.02 Insurance
8.02.01 Insured Risks
8.02.02 Amount of Coverage
8.02.03 Insurer
8.02.04 Prior Notice
8.02.05 Additional Named Insured
8.02.06 Certificates of Insurance
8.02.07 No Limitation
8.03 Indemnification
8.03.01 “Loss”
8.03.02 Scope
8.03.03 Procedure
8.03.04 Deductible
8.03.05 Limitation on Claims
8.04 Disclosure of Agreement
9.00 DUTIES AND OBLIGATIONS OF THE MANUFACTURER
9.01 Exclusivity
9.01.01 Scope
9.01.02 Non-Competition
9.01.03 Penalty Clause
9.01.04 Exception
9.02 Supply
9.02.01 Quantity
a) Undertaking
b) Inability to Supply Products
c) Best Efforts
d) Delivery Dates
9.02.02 Quality
9.03 Training and Support
9.03.01 Training
a) On-Site Training
b) Resource Person
9.03.02 Technical Data
9.03.03 Regulatory Approvals
a) Assistance
b) Data and Documents
9.04 Advertising and Promotion
9.04.01 Control
9.04.02 Material
9.04.03 Marketing Budget
a) Funding
i) Promotional Budget
ii) Unrestrictive
b) Unspent Funds
9.05 Warranty
9.05.01 Intellectual Property
9.05.02 Quality and Compliance
a) Compliance
b) Quality
c) Scope
i) Covered Defects
ii) Uncovered Defects
iii) Repairs
iv) Amendment
d) Execution
9.06 Updating Product List
9.06.01 Systematic Update
9.06.02 Right to Modify
9.06.03 New Product
9.06.04 Updating the Schedules
9.07 Indemnification
9.07.01 “Loss”
9.07.02 Scope
9.07.03 Procedure
9.07.04 Deductible
9.07.05 Safety Defect
9.08 Repair Service and Replacement Parts
9.09 Infringement of Third-Party Intellectual Property Rights
9.09.01 Indemnification
9.09.02 Condition
9.09.03 MANUFACTURER’s Options
9.09.04 Limitation
9.09.05 DISTRIBUTOR’s Options
9.09.06 Indemnification of DISTRIBUTOR
9.09.07 Entire Obligation
9.10 Insurance
9.10.01 Insured Risks
9.10.02 Amount of Coverage
9.10.03 Insurer
9.10.04 Prior Notice
9.10.05 Additional Named Insured
9.10.06 Certificates of Insurance
9.10.07 No Limitation
9.11 Technical Support
9.11.01 Initial
9.11.02 Product Recall
9.11.03 Additional Resources
9.12 Price List
10.00 DUTIES AND OBLIGATIONS OF DISTRIBUTOR
10.01 Distribution
10.01.01 Best Efforts
10.01.02 Resources
10.01.03 Compliance
10.01.04 Permits and Authorizations
10.01.05 Conduct
a) Unethical or Illegal Practices
b) Inconsistent Claims
c) Conduct of Business
d) Terms and Conditions of Sale
10.01.06 Sales Quotas
10.02 Orders
10.02.01 Time Limit
10.02.02 Frequency of Transmitting Orders
10.02.03 Method of Transmitting Orders
10.02.04 Order Form
10.02.05 Order Receiver
10.02.06 Forecasts
10.03 Receipt of Products
10.03.01 Transportation Planning and Costs
10.03.02 Risk of Loss
10.03.03 Delivery
10.03.04 Examination
10.04 Warehousing
10.05 Alterations
10.06 Reporting
10.06.01 Review Meetings
10.06.02 Notice
10.07 Customer Service
10.07.01 Minimum Time Period
10.07.02 Application
10.07.03 Fees
10.07.04 Return of Defective or Non-Compliant Products to MANUFACTURER
10.08 Client List
10.09 Intellectual Property
10.10 Product Recall
10.11 Financial Statements
10.12 Insurance
10.12.01 Insured Risks
10.12.02 Amount of Coverage
10.12.03 Insurer
10.12.04 Prior Notice
10.12.05 Additional Named Insured
10.12.06 Certificates of Insurance
10.12.07 No Limitation
10.13 Non-Competition
10.13.01 Scope
10.13.02 Penalty
10.13.03 Additional Remedy
10.14 Non-Solicitation
10.15 End of Agreement
11.00 SPECIAL PROVISIONS
11.01 Assignment
11.01.01 Prohibition
11.01.02 Sub-Distributors
11.01.03 Effect of Breach
11.01.04 Exception
11.02 Force Majeure
11.02.01 No Default
11.02.02 Duty
11.02.03 Rights of Other PARTY
11.03 Relationship
11.03.01 Independent Contractors
11.03.02 Control Over Performance
11.03.03 No Authority to Bind
11.04 Further Assurances
11.05 Remedies
11.05.01 Election
11.05.02 No Limitations
11.06 Prescriptive Period
11.07 Intellectual Property
11.07.01 No Assignment
11.07.02 Improvements
a) During the Term of the Agreement
b) After Termination of Agreement
11.08 Trade Shows, Conventions and Expositions
12.00 GENERAL PROVISIONS
12.01 Notice
12.02 Dispute Resolution
12.02.01 Good Faith Negotiations
12.02.02 Mediation
12.02.03 Arbitration
a) Notice
b) Reply
c) Appointment of a Third Arbitrator
d) Subcontracts
e) Confidentiality
f) Hearing
g) Ruling
h) Costs
i) Supplementary Rules
12.03 Election
12.04 Counterparts
12.05 Amendment
12.06 No Waiver of Rights
12.07 Electronic Transmission
12.08 Language
13.00 TERMINATION
13.01 Mutual Consent
13.02 Unilateral Termination
13.03 Without Notice
13.04 Prior Notice
13.05 Change of Control
13.06 Effects
13.06.01 Transfer
13.06.02 Confidential Information
13.06.03 Other Property of MANUFACTURER
13.06.04 Property of DISTRIBUTOR Related to Products
13.06.05 Cease and Desist
13.06.06 Unfilled Orders
a) Notice
b) Further Orders
c) Orders Received After Termination of the Agreement
13.06.07 DISTRIBUTOR’s Rights
a) Purchase
b) Delivery
c) Disposition
13.06.08 MANUFACTURER’s Rights
13.07 Amounts Owing to Other PARTY
13.08 Indemnity
13.08.01 Termination by MANUFACTURER
13.08.02 Early Termination
13.08.03 Date of Payment
14.00 EFFECTIVE DATE
14.01 Retroactivity
14.02 Upon Execution
14.03 Deferral
15.00 DURATION
15.01 Probationary Period
15.02 Initial Term
15.03 Renewal
15.03.01 First Renewal
15.03.02 Subsequent Renewals
15.04 Survival
15.05 Non Renewal
16.00 SCOPE


SCHEDULE A – EXCERPT OF A RESOLUTION OF THE MANUFACTURER
SCHEDULE B – EXCERPT OF A RESOLUTION OF THE DISTRIBUTOR
SCHEDULE 0.01.22 – PRODUCT LIST
SCHEDULE 0.01.24 – REPLACEMENT PARTS
SCHEDULE 2.01 – PRICE LIST
SCHEDULE 4.03 – INTERVENTION OF SURETY
SCHEDULE 10.02.04 – ORDER FORM