A distribution agreement looks simple on its face — one party sells the other party's products in a given territory — but the details determine how well it protects your business when circumstances change. A handful of clauses deserve particular attention in a cross-border context.
Territory and Exclusivity
Precisely defining the territory — and whether the arrangement is exclusive, non-exclusive, or exclusive with carve-outs — prevents later disputes over online sales, marketplace listings, and customers who operate across borders. Vague territorial language is one of the most common sources of distributor disputes.
Termination and Notice Periods
Many jurisdictions outside the United States impose minimum notice periods or compensation requirements when terminating a distributor, regardless of what the contract says. Understanding these mandatory local rules before signing — not after a dispute arises — materially changes how termination rights should be drafted.
Intellectual Property Protection
The agreement should be explicit about how trademarks and other IP may be used by the distributor, what happens to that usage upon termination, and who owns any local trademark registrations obtained during the relationship. Ambiguity here can leave a brand owner without control of its own mark in a key market.
Dispute Resolution and Governing Law
Choosing a governing law and forum — litigation or arbitration, and where — affects both the cost of resolving a dispute and whether a resulting judgment or award can actually be enforced against the other party's assets. This choice should be made deliberately, not left to a boilerplate clause.
Local Agent-Protection Laws
A number of countries have statutes that protect local distributors or commercial agents even against contrary contract terms, sometimes requiring compensation on termination "for no cause." Structuring the relationship — and understanding which mandatory rules will apply — requires input from counsel familiar with the distributor's jurisdiction.