What is a distribution contract?

The distribution contract is an agreement established between a supplier, who can be a businessman or manufacturer, and an independent distributor, also a professional or businessman. The purpose of this contract is for the distributor to acquire the supplier’s products or services for subsequent resale and promotion. It is important to note that the distributor acts in his own name and assumes the commercial risk associated with the resale of the products purchased, obtaining a profit margin that corresponds to the difference between the purchase price and the resale price.

When to use this contract?

A distribution contract is used when a manufacturing or supplier company wishes to establish a commercial relationship with an independent distributor. This can happen to expand geographic reach, optimize resources, access specialized channels, expand the customer base, improve logistics, or take advantage of the dealer’s experience and distribution network. In short, it is used to facilitate the marketing and sale of products or services through partnerships with distributors.

When not to use this contract?

This is a generic distribution contract model, if you want to know what specific types there are, at LexDoka we have this article where it is explained.

Essential content

The essential content of a distribution contract includes:

• Identification of the parties.
• Specification of products and services.
• Geographic scope.
• Price of products and services.
• Contract duration.
• Obligations of the parties.
• Jurisdiction and applicable law.

Optional content

• Exclusivity clause.
• Unilateral non-compete agreement

Applicable law

This is an atypical contract, so there is no specific legal regulation regarding it.

However, for the interpretation of these contracts, Law 12/1992, of May 27, on the agency contract can be interpreted by analogy. Also, within a European framework, Regulation (EU) No. 330/2010, of April 20, can be applied by analogy and, in terms of contractual validity, the rules of the Commercial Code.