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Exclusive distribution contract

Exclusive distribution contract is the contract according to which one side (distributor) in borders of business activities is obliged to purchase goods from another side (supplier), promote and sell it on a certain defined by the contract territory, and the supplier is obliged not to supply goods for sell on this territory himself or with help of the third parties, also not to sell goods to the third parties for distribution on this territory.


While drawing up a contract it is necessary to take into account following statements:
The condition of exclusivity: distinguishing feature is that distributor has a secured right of distribution on the assigned territory. Supplier is obliged not to sell goods to the third parties on this specified territory.

Goods intended for sale: list of these goods must be presented very clearly, since it is connected with distributor’s exclusive right to sell these goods on the specified territory. Also this list guarantees that supplier and distributor won’t compete while realization of the goods on the specified territory.
Sales territory: contract must contain defined sales territory. Sales territory must be defined clearly in order to avoid dispute between supplier and other distributors.
Sales network: if as a consequence of dealership or business agreement sales network is created, then it is necessary to determine the way supplier controls the list of participants of the sales network.

The following variants are available:

 

  1. Total freedom for distributor in choosing partners;
  2. Necessity of getting a preliminary permit from the supplier;
  3. Necessity of informing supplier about an order of goods selling.

Trademark right.


The distributor acquires the right to sell the goods made or belonging to the principal on the exclusive basis, therefore usually there are regulations on the rights of the distributor on trademarks, and regulations on need of the trademark registration in Russia (according to the Russian legislation). At the same time the foreign principal (the owner of the rights to the trademark) is recommended to sign the special license agreement with the distributor (and register it in Russian Agency for Patents and Trademarks- Rospatent) for protection of his rights in Russia, as the relevant provisions of the distributor agreement on the trademark not always can meet the requirements of the Russian right about the license contract (Art. 1235 – 1237 The Civil Code of the Russian Federation).


Conditions of delivery.


Import and export obligations of both sides must be clearly defined (commonly INCOTERMS 2010 is used).
Observance of the Russian Customs and Currency legislation plays an important role while moving goods on the territory of Russian Federation.

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