Merchandise Distribution Agreement - Template Form Pro · EN-CA-law

DISTRIBUTION AGREEMENT

Effective Date: ________

This Distribution Agreement (the “Agreement”) is made and entered into and takes effect on ________ (the “Effective Date”) by and between the following parties:

________ (the “Supplier”)
a corporation incorporated under the laws of ________,
having its principal place of business at:

________

AND

________ (the “Distributor”)
a corporation incorporated under the laws of ________,
having its principal place of business at:

________

The Supplier and the Distributor are each referred to individually as a “Party” and collectively as the “Parties”. This Agreement is governed by the laws of the Province of ________ and the federal laws of Canada applicable therein.

RECITALS

WHEREAS the Supplier carries on the business of supplying the Products (as defined below) and wishes to appoint the Distributor to distribute such Products within the Territory (as defined below);

AND WHEREAS the Distributor wishes to distribute the Products within the Territory upon the terms and conditions set out in this Agreement;

AND WHEREAS the Parties wish to record in writing the terms and conditions governing their relationship;

NOW THEREFORE, in consideration of the mutual covenants and agreements contained herein and other good and valuable consideration (the receipt and sufficiency of which are hereby acknowledged), the Parties agree as follows:

ARTICLE I — INTERPRETATION

§ 1.1 In this Agreement, words importing the singular include the plural and vice versa, and words importing gender include all genders. References to a statute include that statute as amended, re-enacted or replaced from time to time and any regulations made thereunder.

§ 1.2 The recitals and any schedules to this Agreement form an integral part hereof.

ARTICLE II — PRODUCTS

§ 2.1 The Supplier agrees to supply, and the Distributor agrees to distribute, the following products (collectively, the “Products”):

________.

§ 2.2 The Supplier may, on reasonable prior written notice, modify, add or discontinue Products, provided that any such change shall not affect orders accepted prior to the effective date of the change.

ARTICLE III — TERRITORY AND APPOINTMENT

§ 3.1 The Supplier hereby appoints the Distributor as its exclusive distributor of the Products within the following geographic territory (the “Territory”):

________.

§ 3.2 The Distributor shall not sell, resell, promote, deliver, service or otherwise distribute the Products outside the Territory. If the Distributor makes a material change to its distribution network, it shall notify the Supplier as soon as reasonably practicable.

ARTICLE IV — RELATIONSHIP OF THE PARTIES

§ 4.1 The Distributor acts as an independent contractor purchasing the Products for resale on its own account. Nothing in this Agreement creates a partnership, joint venture, agency, franchise or employment relationship between the Parties. Neither Party has authority to bind the other or to incur obligations on the other’s behalf, except as expressly provided herein.

§ 4.2 The Distributor shall use commercially reasonable efforts to obtain and promote the sale of the Products in the Territory, shall maintain adequate sales and support personnel, and shall comply with the Supplier’s reasonable policies and procedures concerning the purchase and sale of the Products as notified to the Distributor in writing from time to time.

§ 4.3 The Distributor shall conduct its business in a manner that does not denigrate, tarnish or impair the name, reputation or goodwill of the Supplier or the Products.

§ 4.4 The Distributor acknowledges that its rights in respect of the Products are limited to those expressly granted in this Agreement, and that all other rights are reserved to the Supplier. The Supplier shall use commercially reasonable efforts to fulfil the Distributor’s accepted orders for the Products.

ARTICLE V — EXCLUSIVITY

§ 5.1 During the term of this Agreement, the Supplier shall not sell or ship the Products, or similar products bearing an identical or confusingly similar trademark or commercial identification, to any person other than the Distributor within the Territory.

§ 5.2 Any inquiry received by the Supplier concerning the Products within the Territory shall be referred to the Distributor.

ARTICLE VI — PRICE AND PAYMENT

§ 6.1 The purchase price of the Products (the “Purchase Price”) shall be set out on the invoice issued to the Distributor for each shipment and shall be negotiated by the Parties prior to the first shipment. The Purchase Price is payable in Canadian dollars and shall be established as follows:

________.

§ 6.2 The Purchase Price may include shipping, insurance and handling charges, which the Distributor agrees to pay.

§ 6.3 All amounts payable under this Agreement are exclusive of applicable taxes, including the Goods and Services Tax/Harmonized Sales Tax and any applicable provincial sales taxes, which shall be paid by the Distributor where required by law. The Supplier’s applicable tax registration number is ________.

§ 6.4 The payment schedule for the Purchase Price is as follows:

________.

§ 6.5 Overdue amounts shall bear interest at the rate of ________ percent per annum, calculated from the due date until paid in full, subject to any applicable limit under the Interest Act (Canada).

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§ 6.7 Risk of loss in the Products passes to the Distributor upon completion of delivery by the Supplier (if delivered in person) or upon delivery of the Products to the carrier.

ARTICLE VII — TITLE AND SECURITY INTEREST

§ 7.1 Title to the Products passes to the Distributor upon delivery; however, the Supplier retains a purchase-money security interest in the Products and their proceeds until the Purchase Price has been paid in full.

§ 7.2 The Distributor acknowledges that such security interest may be perfected by registration under the applicable Personal Property Security Act of the governing province, and agrees to execute and deliver such financing statements and other documents as the Supplier may reasonably require to perfect and maintain the security interest. The Supplier shall have all rights and remedies of a secured party thereunder.

§ 7.3 If the Distributor fails to pay any amount when due, the Supplier may, subject to applicable law, repossess the Products and exercise any remedy under this Agreement or available at law or in equity.

ARTICLE VIII — INSURANCE

§ 8.1 The Distributor shall, at its own expense, obtain and maintain in full force and effect throughout the term of this Agreement adequate insurance coverage, including commercial general liability insurance and product liability insurance, in amounts of not less than ________ per occurrence.

§ 8.2 Upon request, the Distributor shall provide the Supplier with certificates of insurance evidencing such coverage and shall name the Supplier as an additional insured where applicable. The Distributor shall give the Supplier prompt written notice of any cancellation, non-renewal or material change to such coverage.

ARTICLE IX — INDEMNIFICATION

§ 9.1 Each Party (the “Indemnifying Party”) shall indemnify, defend and hold harmless the other Party (the “Indemnified Party”) and its officers, directors, employees, agents and representatives from and against any and all claims, losses, damages, liabilities, costs and expenses, including reasonable legal fees, arising out of or relating to any breach of this Agreement by the Indemnifying Party or any negligent or wrongful act or omission of the Indemnifying Party in connection with the performance of this Agreement.

§ 9.2 The Indemnified Party shall provide the Indemnifying Party with prompt written notice of any claim for which indemnification is sought and shall reasonably cooperate in the defence of such claim. The Indemnifying Party shall not settle any claim in a manner that imposes any obligation on the Indemnified Party without its prior written consent.

ARTICLE X — LIMITATION OF LIABILITY

§ 10.1 Except in respect of the indemnification obligations under Article IX, breach of confidentiality, or liability that cannot be excluded or limited under applicable law, neither Party shall be liable to the other for any indirect, incidental, consequential, special or punitive damages, or for loss of profits or business, arising out of or in connection with this Agreement, whether based in contract, tort or otherwise, even if advised of the possibility of such damages.

ARTICLE XI — COMPLIANCE WITH LAWS

§ 11.1 The Distributor shall comply with all applicable federal, provincial, municipal and foreign laws and regulations, including all applicable export and import control laws and the requirements of the Competition Act (Canada), and shall obtain and maintain all licences, permits and registrations required to perform its obligations under this Agreement.

ARTICLE XII — CONFIDENTIALITY

§ 12.1 Each Party acknowledges that it may have access to certain non-public “Confidential Information” and trade secret information (collectively, “Proprietary Information”) of the other Party. The “Receiving Party” means the Party receiving Proprietary Information, and the “Disclosing Party” means the Party disclosing it.

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§ 12.3 Confidential Information does not include information that:

A) is or becomes publicly known through no fault of the Receiving Party;

B) is already lawfully known to the Receiving Party prior to disclosure;

C) is disclosed by the Disclosing Party to third parties without restriction;

D) is lawfully received from a third party entitled to disclose it; or

E) is independently developed by the Receiving Party, as it can demonstrate.

§ 12.4 “Trade Secret Information” means any formula, process, method, model, design or other information that is not generally known or reasonably ascertainable by the public, consumers or competitors and from which an economic or commercial advantage may be derived.

§ 12.5 Each Party agrees:

A) not to disclose Proprietary Information to third parties by unauthorized means during the term of this Agreement;

B) not to disclose Confidential Information to third parties by unauthorized means for a period of three (3) years after the termination of this Agreement;

C) not to disclose Trade Secret Information at any time for so long as it remains a trade secret under applicable law; and

D) not to use Confidential Information or Trade Secret Information for any purpose other than as set out in this Agreement or as expressly authorized by the Disclosing Party.

§ 12.6 Nothing in this Article restricts a disclosure required by law, court order or regulatory authority, provided the Receiving Party gives the Disclosing Party prompt written notice (where lawful) and reasonable cooperation to seek protective relief.

ARTICLE XIII — WARRANTIES

§ 13.1 The following specific warranties apply to the Products:

________.

§ 13.2 Except as expressly set out herein, and subject to any non-waivable rights under applicable consumer protection legislation, the Supplier makes no other warranties, express or implied, including any implied warranty or condition of merchantability or fitness for a particular purpose, all of which are hereby disclaimed to the fullest extent permitted by law.

ARTICLE XIV — TERM AND TERMINATION

§ 14.1 This Agreement takes effect on the Effective Date and continues for an initial term of ________ years, and thereafter automatically renews for successive periods of equal duration unless either Party gives written notice of non-renewal in accordance with this Article.

§ 14.2 Either Party may terminate this Agreement without cause prior to the expiry of the then-current term upon the following written notice:

________.

§ 14.3 Where a Party terminates without giving the notice required under § 14.2, it shall pay an early termination fee of ________ Canadian dollars, which the Parties agree is a genuine pre-estimate of the loss occasioned by such early termination and not a penalty.

§ 14.4 Either Party may terminate this Agreement for default upon sixty (60) days’ written notice describing the breach. If the breach is not cured within such sixty (60)-day period, the Agreement terminates at the end of that period; if cured, the Agreement remains in full force and effect.

§ 14.5 The Supplier may terminate this Agreement immediately upon written notice if:

a) the Distributor becomes insolvent, makes an assignment for the benefit of creditors, becomes bankrupt, or enters into any arrangement or compromise with its creditors;

b) the Distributor fails to maintain any required federal or provincial licence;

c) the Distributor fails to maintain the required insurance;

d) the Distributor undergoes a material change in its corporate structure, including a change of control; or

e) the Distributor fails to meet the Performance Measures described in Article XV.

§ 14.6 Upon termination prior to the natural expiry of the term, the Supplier may, at its sole discretion, repurchase the Products remaining in the Distributor’s saleable inventory, or require the Distributor to sell such Products to another distributor, in each case at the cost paid by the Distributor, provided the Products have been maintained in good and saleable condition.

§ 14.7 The provisions of Articles VII, IX, X, XII and XVI, and any accrued payment obligations, survive the termination or expiry of this Agreement.

ARTICLE XV — PERFORMANCE MEASURES

§ 15.1 The Distributor shall use commercially reasonable efforts to meet the following performance measures (the “Performance Measures”):

________.

ARTICLE XVI — TRANSACTIONS OUTSIDE THE TERRITORY

§ 16.1 The Distributor shall not sell, attempt to sell, promote, advertise or solicit orders for the Products outside the Territory. Inquiries for Products outside the Territory shall be referred to the Supplier, which shall determine how to proceed.

ARTICLE XVII — GENERAL PROVISIONS

A) GOVERNING LAW AND JURISDICTION: This Agreement is governed by and construed in accordance with the laws of the Province of ________ and the federal laws of Canada applicable therein. The Parties irrevocably attorn to the exclusive jurisdiction of the courts of the Province of ________ in respect of any dispute arising out of or in connection with this Agreement. This choice of law, venue and jurisdiction is mandatory and not optional.

B) LANGUAGE: The Parties have requested that this Agreement and all related documents be drawn up in English. Les parties ont demandé que la présente convention et tous les documents s’y rapportant soient rédigés en anglais. All communications and notices under this Agreement shall be in English.

C) ASSIGNMENT: Neither Party may assign, sell, lease or otherwise transfer this Agreement or any of its rights or obligations hereunder, in whole or in part, without the prior written consent of the other Party, except that the Supplier may assign this Agreement to an affiliate or in connection with a sale of all or substantially all of its assets or business.

D) AMENDMENTS: This Agreement may be amended only by a written instrument signed by both Parties.

E) NO WAIVER: No provision of this Agreement is waived except by a written agreement signed by the waiving Party. No waiver of any provision constitutes a waiver of any other provision or of the same provision on a subsequent occasion. A Party’s failure to enforce any provision does not constitute a waiver thereof.

F) SEVERABILITY: If any provision of this Agreement is held to be unenforceable, it shall be deemed amended to the minimum extent necessary to render it enforceable, and the remaining provisions shall continue in full force and effect.

G) PUBLIC ANNOUNCEMENTS: Neither Party shall make any public announcement or disclosure regarding the existence or terms of this Agreement without the prior written consent of the other Party, except as required by law.

H) ENTIRE AGREEMENT: This Agreement constitutes the entire agreement between the Parties and supersedes all prior or contemporaneous agreements, representations and understandings, whether written or oral.

I) HEADINGS: Headings are for convenience of reference only and do not affect the interpretation of this Agreement.

J) COUNTERPARTS AND ELECTRONIC SIGNATURE: This Agreement may be executed in counterparts and by electronic signature, each of which is deemed an original and all of which together constitute one and the same agreement. If the execution dates differ, this Agreement takes effect on the later date of signature.

K) FORCE MAJEURE: Neither Party is liable for any failure or delay in performance (other than payment obligations) caused by events beyond its reasonable control, including acts of God, natural disasters, epidemics, civil or military authority, riots, embargoes, labour disputes and other unforeseen circumstances.

L) NOTICES: Any notice under this Agreement shall be in writing and delivered by first class mail, airmail or electronic mail to the address of the relevant Party set out at the head of this Agreement or to the electronic address set out below, or such other address as a Party may notify in accordance with this clause. The contact details of the Parties are:

Supplier: ________

Distributor: ________

Notices are deemed received three (3) business days after mailing (domestic first class mail), seven (7) business days after mailing (airmail), or on the next business day after sending (electronic mail). Proof of proper addressing and dispatch, and confirmation of transmission in the case of electronic mail, is sufficient proof of giving notice.

IN WITNESS WHEREOF

The Parties have executed this Agreement as of the dates set out below.

SUPPLIER

Name: ________

Per (authorized signatory): ________

Title: ________

Signature: _________________________

Date: ________

DISTRIBUTOR

Business Name: ________

Per (authorized signatory): ________

Title: ________

Signature: _____________________

Date: ________