Distribution Agreements
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Distribution Agreements
A distribution agreement is necessary for any business in the UAE market. This a written contract can help both manufacturers and distributors avoid future conflicts by ensuring that all business arrangements have been discussed and agreed upon.
Distribution agreements are often written in conjunction with manufacturing agreements and licensing agreements. The pulpose of each type of agreement may vary depending on the circumstances, but they all save similar functions: They define who owns what intellectual property rights (IPR) associated with products being manufactured or distributed by one party for sale by another party; They specify how ownership of IPR will be transference once goods are produced or services rendered.
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PURPOSE
Distribution Agreement helps in setting up business in Dubai:
A written agreement is necessary for any kind of agreement between two parties. Distributors, manufacturers, and suppliers all rely on distribution agreements to avoid conflicts in the future. If you plan to open a business in the UAE market, then it is highly recommended that you obtain a distribution agreement.
- Defining mutual rights, obligations, and responsibilities of all parties involved
- Informing about the product, price, and quantity to be distributed
- To make sure that your supplier is paying taxes on his profits and not evading them. This will help you in paying lower taxes as well.
- To avoid any frauds and scams.
This agreement details how the distributor agrees to purchase the products from the manufacturer/supplier and sell them to clients within certain geographical boundaries, as well as listing other important clauses that must be followed by both parties.
- Exclusive or non-exclusive territories can be defined in contracts.
- Terms and length, price, and payment terms ns are also included in many contracts.
- Warranties are another important component of contracts.
- The target or sales objective helps determine how much money will be made and the distribution network is a crucial part of the contract.
- Sub-distributors are individuals or businesses that sell products or services on behalf of the original distributor.
- Support provided by distributors includes training, advertising and promotion.
- The distributor may not compete with the product/service within its territory for a specified period after termination of the contract (non-compete clause).
- If there is an arbitration clause, it specifies that legal disputes can be settled by arbitration instead of going to coult.
- Distribution agreements do not have to be signed with a UAE national or 100% by a UAE national.
- It is not required for distributors to register with the UAE Ministry of Economy (MOE)
- Distributors may sign written or non-written agreements.
What Does the distribution Agreement covers:
- Limitations on the distributor’s business activities.
- A minimum purchase requirement is a contractual provision that requires a distributor to buy a minimum level of product from the manufacturer.
- Restrictions on the type of goods a distributor is allowed to sell.
- Limitations on the sale of competing products
- Termination and limitation of liability provisions, and pricing provisions.
The validity of the distribution agreements varies based on how long they last, as well as what type of product is being sold under them. For example, if a distributor sells only one item under this kind of contract with no options for expansion, it would make sense for them to have an agreement that lasts only a few months or years rather than decades or centuries like some other types of agreements might last.
For assistance preparmg your documents, business setup in UAE, or requesting additional information, please contact our lawyers at info@legal-house.com.
