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 Agreement
0.01.02 Best Effort
0.01.03 Breach
0.01.04 Change in Control
0.01.05 Confidential Information
0.01.06 Encumber or Encumbrance
0.01.07 Event of Default
0.01.08 Force Majeure
0.01.09 Full Duration
0.01.10 Fundamental Provisions
0.01.11 Intellectual Property
0.01.12 Legal Representatives
0.01.13 Manufacturing Costs
0.01.14 Master Tape
0.01.15 PARTY
0.01.16 Period
0.01.17 Person
0.01.18 Prime Rate
0.01.19 Producer
0.01.20 Product
0.01.21 Related Person
0.01.22 Royalties
0.01.23 Subsidiary
0.01.24 Successors
0.01.25 Territory
0.02 Precedence
0.03 Jurisdiction
0.03.01 Governing Law
0.03.02 Non-compliance
0.04 Miscellaneous
0.04.01 Cumulative Rights
0.04.02 Time and Dates
0.04.03 Financial References
0.04.04 References within Agreement
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 GAAP
1.00 PURPOSE
1.01 Grant of Distribution
1.01.01 Products
1.01.02 Products Previously Distributed
1.01.03 Videotapes
1.02 Conditions
1.02.01 Required by PRODUCER
1.02.02 Required by the MANUFACTURER
1.02.03 Choice
2.00 CONSIDERATION
2.01 Purchase Price
2.02 Adjustments
3.00 TERMS OF PAYMENT
3.01 Purchase Price
3.02 Deduction
3.03 Reimbursement
3.03.01 Deduction
3.03.02 Full Payment
3.04 Professional Fees and Disbursements
3.05 Interest
3.06 Loss of Term
4.00 SECURITY
4.01 In favour of PRODUCER
4.02 In favour of DISTRIBUTOR
4.03 Letter of Credit
4.04 Right of Ownership
4.05 Suretyship
4.06 Pledge
4.06.01 Creation of the Pledge
4.06.02 Indivisibility of the Pledge
4.06.03 Undertaking of DISTRIBUTOR regarding the Pledge
4.06.04 Notice of Default
4.06.05 Care
4.06.06 Loss
4.07 Excess
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
6.00 REPRESENTATIONS AND WARRANTIES OF THE PRODUCER
6.01 Status
6.02 Authority
6.03 Binding Agreement
6.04 Insurance
6.05 Nominee
6.06 Fundamental Provisions
6.07 Disclosure
6.08 Ownership
6.09 Authorization
6.10 Encumber or Encumbrance
6.11 Default
7.00 REPRESENTATIONS AND WARRANTIES OF THE DISTRIBUTOR
7.01 Status
7.02 Authority
7.03 Binding Agreement
7.04 Insurance
7.05 Nominee
7.06 Fundamental Provisions
7.07 Disclosure
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 Issuer
8.02.04 Co-insured
8.02.05 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 PRODUCER
9.01 Supply
9.01.01 Quantity
9.01.02 Master Tapes
9.02 Delivery
9.03 Inadequate Product
9.03.01 Refusal
9.03.02 Other Distributor
9.04 Royalties
9.04.01 Payment by PRODUCER
9.04.02 Payment by DISTRIBUTOR
9.05 Exclusivity
9.05.01 Sale
9.05.02 Shows
9.06 Advertising and Promotional Means
9.07 Gratuity
9.08 Defective Products
9.09 Indemnification
10.00 DUTIES AND OBLIGATIONS OF THE DISTRIBUTOR
10.01 Best Effort
10.02 Responsibilities
10.03 Insurance
10.03.01 Inventory
10.03.02 Limited Liability
10.03.03 Excess Value
10.04 Rendering Account
10.05 Transportation
11.00 SPECIAL PROVISIONS
11.01 Assignment
11.01.01 Prohibition
11.01.02 Effect of Breach
11.01.03 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 No Control over Performance
11.03.03 No Authority to Bind
11.04 Further Assurances
11.05 Other Remedies
11.05.01 Choices
11.05.02 No Limitations
11.06 Prescription
11.07 Intellectual Property
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
12.03 Election
12.04 Counterparts
12.05 Amendment
12.06 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 Recovery
13.06.01 Requirements
13.06.02 Defaul on Warranties
13.06.03 Recovery of Inventory
13.06.04 Failure to Recover
14.00 EFFECTIVE DATE
14.01 Retroactivity
14.02 Execution
14.03 Deferral
15.00 DURATION
15.01 Probationary or Trial 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
15.06 Extension of Term
16.00 SCOPE

SCHEDULE A – EXCERPT FROM A RESOLUTION OF PRODUCER
SCHEDULE B – EXCERPT FROM A RESOLUTION OF THE DISTRIBUTOR
SCHEDULE 4.03 – LETTER OF CREDIT
SCHEDULE 4.05– SURETYSHIP
SCHEDULE 10.04 - PRO FORMA SALES REPORT