INTERCOMPANY AGREEMENT TEMPLATE:
DISTRIBUTION AGREEMENT
Template dated: 17 October 2013
Purpose and scope
This template has made available by LCN Legal Limited to help corporate groups and their advisers to put in
place intercompany agreements to support their transfer pricing compliance. It is not suitable for documenting
commercial relationships between unconnected undertakings.
This template is written in general terms and its application to specific situations will depend on the particular
circumstances involved. While it aims to set out terms which may commonly be used for intra group
transactions, it does not purport to address every issue which parties could or should raise. What is
appropriate in any particular case will depend on a variety of factors, including the functional analysis, the
ownership of assets, the intended allocation of risk, the ability of the contracting parties to bear those risks,
and any other contractual terms which form part of the chain of supply both internally and externally.
Structure
This template is structured as a contract schedule with standard terms. The standard terms are intended to be
amended as necessary and adopted by the relevant group as governing the particular type of relationship
generally. Separate contract schedules may then be entered into on a bilateral basis between counterparties
within the relevant group.
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INTERCOMPANY DISTRIBUTION AGREEMENT
PARTIES:
Supplier:
Full company name:
Country of incorporation:
Company registration number:
Address:
Distributor:
Full company name:
Country of incorporation:
Company registration number:
Address:
AGREEMENT:
This Agreement sets out the terms on which the Supplier has appointed the Distributor as distributor of the
Products within the Territory with effect from the Start Date
1.
START DATE: [Insert date]
2.
END DATE: [Insert date if applicable]
3.
TERMINATION NOTICE PERIOD: Not less than [3 months] [to take effect as at the end of a Financial
Year].
4.
FINANCIAL YEAR: From the Start Date until [
5.
THE PRODUCTS:
] and each successive period of 12 months.
5.1. [Description of Product 1]
5.2. [Description of Product 2]
6.
TERRITORY: [Insert description of the Territory within which the Distributor can resell the Products].
7.
[NO EXCLUSIVITY: The appointment of the Distributor is non-exclusive. The Supplier accordingly
reserves the right to appoint other distributors in the Territory or the supply the Products directly.] OR
[EXCLUSIVITY: The appointment of the Distributor is exclusive. Accordingly the Supplier shall not
appoint any other distributors in the Territory [or supply the Products directly to customers in the
Territory].]
8.
DELIVERY TERMS: Risk and title in each consignment of the Products shall pass from the Supplier to
the Distributor [on leaving the Supplier's premises] or [on reaching the Distributor's premises] or [other].
(See clause [ ] of the Standard Terms.)
9.
PRICES: The Price for the Products shall be [as follows] [in accordance with the Supplier's list prices as
in force from time to time].
10.
PAYMENT: The Price for the Products will be invoiced [quarterly] in arrears and paid within [60 days] of
[the quarter in which the invoice date falls] [the last day of the period to which the amount relate].
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11.
INTEREST ON LATE PAYMENTS: Interest at the rate of [2]% per annum above the base rate from
time to time of the [Name of Bank] will accrue on any overdue amounts, and will be compounded
[annually].
12.
SUPPLIER TO BEAR INVENTORY RISKS: [Delete if not applicable] [The Supplier shall bear all credit
risks in relation to the sale of the Products in the Territory and accordingly the Distributor shall be
entitled on demand to require the Supplier to repurchase at cost from time to time any Products
supplied by the Supplier.]
13.
SUPPLIER TO BEAR CREDIT RISKS: [Delete if not applicable] [The Supplier shall bear all credit risks
in relation to the sale of the Products in the Territory and the Distributor shall be entitled on demand to
require the Supplier to purchase at par all debtors arising in connection from the sale of the Products in
the Territory.]
14.
PRODUCT LIABILITY RISKS: [The Supplier] [The Distributor] shall bear all product liability risks in
relation to the sale of the Products in the Territory. (See clause [ ] of the Standard Terms).
15.
SPECIAL TERMS: [None]
16.
INCORPORATION OF STANDARD TERMS: This Agreement shall be deemed to incorporate the
“Standard Terms for the Appointment of Intercompany Distributor” ([specify version date etc].
17.
ENTIRE AGREEMENT: This Agreement, together with the Standard Terms referred to above,
constitutes the whole agreement in respect of the services referred to above.
SIGNATURES:
(1) Signed for and on behalf of the SUPPLIER
Signature:
Full name of Signatory:
Position / job title:
Date of actual signature:
(2) Signed for and on behalf of the DISTRIBUTOR
Signature:
Full name of Signatory:
Position / job title:
Date of actual signature:
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STANDARD TERMS AND CONDITIONS FOR THE APPOINTMENT OF INTERCOMPANY DISTRIBUTOR
1. INTERPRETATION
1.1. In these Standard Terms unless the context requires otherwise:
"Agreement" means the agreement between the Supplier and the Distributor comprising the Contract
Schedule and these Standard Terms;
"Contract Schedule" means a schedule signed by the Supplier and the Distributor which incorporates
these Standard Terms;
"Intellectual Property" includes any know-how, patents, database rights, design rights, trade marks or
copyright, and any other intellectual property rights existing anywhere in the world;
"Product Liability Claims" means all losses, damages, costs, actions, proceedings, claims, demands,
liabilities and expenses which may be suffered or incurred by the Distributor or the Supplier (as the
case may be) arising directly or indirectly out of the sale or use of the Products in the Territory,
including without limitation any claim that the Products breach the Intellectual Property rights of any
third party; and
"VAT" means value added tax.
1.2. Words and expressions defined in the relevant Contract Schedule have the same meanings in these
Standard Terms.
1.3. If there is any conflict between the Contract Schedule and these Standard Terms, the terms of the
Contract Schedule shall prevail.
2. APPOINTMENT
The Supplier appoints the Distributor as a distributor of the Products in the Territory with effect from the
Start Date.
3. MARKETING
3.1. The Distributor shall:
3.1.1.use reasonable efforts to promote and sell the Products within the Territory;
3.1.2.comply with all laws and regulations relating to the promotion and sale of the Products in the
Territory; and
3.1.3.maintain records of all marketing activities carried out in connection with the Agreement supply
these to the Supplier upon reasonable request.
4. ORDER PROCEDURE
4.1. The Distributor may place orders for the Products with the Supplier from time to time.
4.2. Each order shall constitute an offer to purchase the relevant Products subject to the terms of the
Agreement.
4.3. An order shall not be deemed to be accepted unless the Supplier accepts the order in writing or
despatches the relevant Products, at which point a contract for the sale of the relevant Products
specified in the order shall come into existence.
5. DELIVERY TERMS
5.1. Unless otherwise specified in the Contract Schedule:
5.1.1.title to the Products; and
5.1.2.risk in the Products (including the responsibility to insure the Products)
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shall pass to the Distributor [on delivery to the Distributor's warehouse].
5.2. The Supplier shall be responsible for obtaining all import licences or permits necessary for delivery
of the Products and for any associated customs duties, clearance charges, taxes, and other
amounts payable.
6. PRICE AND PAYMENT
6.1. The prices for the Products shall be as set out in the Contract Schedule or (where no such prices
are specified) in accordance with the current price list of the Supplier as in force from time to time.
6.2. The prices are exclusive of the costs and charges of packaging, insurance and transport of the
Products, which the Distributor shall pay in addition at cost.
6.3. The Supplier shall invoice the Distributor for the prices and related costs in accordance with the
provisions specified in the Contract Schedule.
6.4. The prices are exclusive of VAT which (when applicable) the Distributor shall pay to the Supplier in
addition.
7. LIABILITY
7.1. The Supplier warrants that the Products provided to the Distributor shall be of satisfactory quality
and shall correspond to the Supplier's descriptions.
7.2. Where the Supplier is shown in the Contract Schedule as bearing all product liability risks, then the
Supplier will indemnify the Distributor and keep the Distributor indemnified from and against all
Product Liability Claims.
7.3. Where the Distributor is shown in the Contract Schedule as bearing all product liability risks, then:
7.3.1.the Distributor will indemnify the Supplier and keep the Supplier indemnified from and against all
Product Liability Claims; and
7.3.2.the Supplier's total liability to the Distributor in contract, tort (including negligence or breach of
statutory duty), misrepresentation or otherwise, arising in connection with the performance or
contemplated performance of the Agreement shall be limited to the price of the Products
delivered or to be delivered to the Distributor.
8. DURATION AND TERMINATION
8.1. The Agreement will come into force on the Start Date and shall continue until the End Date or until it
is terminated in accordance with this clause [8].
8.2. Either party may terminate the Agreement by giving written notice to the other party being not less
than the Termination Notice Period set out in the Contract Schedule.
8.3. Either party may terminate the Agreement with immediate effect by notice in writing to the other
party (the "Defaulting Party") in the following circumstances:
8.3.1.if the Defaulting Party materially breaches the Agreement and has not remedied the breach
within 60 days after written notice is given to the Defaulting Party specifying the breach; or
8.3.2.if any order is made or resolution passed for the winding up of the Defaulting Party, an
administrator or receiver is appointed, a winding-up order is made or if the Defaulting Party
takes or suffers any similar or analogous action in consequence of debt.
9. CONSEQUENCES OF TERMINATION
9.1. Neither party shall be required to pay any compensation to the other party in connection with the
expiry or termination of the Agreement for whatever reason. This does not affect the parties' accrued
rights and obligations as at the date of expiry or termination.
9.2. Upon the termination or expiry of the Agreement howsoever arising:
9.2.1.the Distributor shall deliver to the Supplier a list of all customers and potential customers with
whom the Distributor has had dealings in relation to the Products;
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9.2.2.the Distributor shall cease to hold itself out as having any right to distribute the Products except
for the purpose of fulfilling orders accepted by the Supplier prior to the date of termination; and
9.2.3.the rights of either party against the other which have accrued up to the date of termination shall
not be affected.
10. DATA PROTECTION
The parties shall at all times in the performance of the Agreement comply with all applicable laws
concerning the protection of personal data.
11. ENTIRE AGREEMENT
11.1. These Standard Terms and the Contract Schedule constitute the entire agreement of the parties and
supersede all prior agreements and understandings between the parties in connection with its
subject matter.
11.2. Any representation, warranty or undertaking implied by law or by custom is expressly excluded.
11.3. Nothing in the Agreement operates to exclude any liability for fraud.
12. APPLICABLE LAW AND JURISDICTION
The Agreement shall be governed by the laws of England and Wales and shall be subject to the nonexclusive jurisdiction of the English courts.
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