Distribution Agreement - Template, Sample Form Pro · PH-law

DISTRIBUTION AGREEMENT

KNOW ALL MEN BY THESE PRESENTS:

This Distribution Agreement (the "Agreement") is made and entered into this ________ day of ________, 20________ at City/Municipality of ________, Province of ________, by and between:

________, a stock corporation duly organized and validly existing under and by virtue of the laws of the Philippines, with principal address at ________, with SEC Registration No. ________ and Tax Identification No. ________, represented in this act by ________, who holds the following position: ________, duly authorized by virtue of a Board Resolution/Secretary's Certificate dated ________, hereinafter referred to as the "Supplier";

- and -

________, a stock corporation duly organized and validly existing under and by virtue of the laws of the Philippines, with principal address at ________, with SEC Registration No. ________ and Tax Identification No. ________, represented in this act by ________, who holds the following position: ________, duly authorized by virtue of a Board Resolution/Secretary's Certificate dated ________, hereinafter referred to as the "Distributor".

The Supplier and the Distributor shall be referred to individually as a "Party" and collectively as the "Parties".

WITNESSETH THAT:

WHEREAS, the Supplier is engaged in the business of manufacturing, importing, and/or supplying the Products (as hereinafter defined);

WHEREAS, the Distributor desires to purchase, inventory, promote, and resell the Products within the Territory (as hereinafter defined), and the Supplier is willing to supply the same upon the terms and conditions herein set forth;

NOW THEREFORE, for and in consideration of the foregoing premises and the mutual covenants contained herein, the Parties, pursuant to Articles 1305, 1306, and 1458 of the Civil Code of the Philippines, hereby agree as follows:

§ I. PRODUCTS

The Supplier shall supply, and the Distributor shall purchase, inventory, promote, and resell the following products (the "Products"):

________

The Distributor shall not modify, change, or alter the Products in any manner whatsoever.

§ II. TERRITORY

The Products shall be distributed exclusively within the following geographic territory (the "Territory"):

________

§ III. EXCLUSIVITY

3.1. The Supplier shall not sell or ship the Products, including any similar products or products bearing the same or similar trademark or other business identification on the product or package, to any person or entity within the Territory except the Distributor.

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

§ IV. DISTRIBUTION TERMS

4.1. The Distributor shall exercise its best efforts to obtain and promote the sale of the Products within the Territory in accordance with the Supplier's marketing policies and programs, and shall abide by the policies, procedures, and other rules regarding the purchase and sale of the Products. The Distributor shall conduct its business in a manner favorable to and promotional of the Supplier and the Products, and shall not disparage or tarnish the name, reputation, and goodwill of the Supplier and the Products.

4.2. The Distributor shall maintain adequate inventory of the Products and adequate staff, including sales staff, at all times, and shall provide adequate training to any staff involved in the sale of the Products.

4.3. The Distributor shall not conduct the sale, resale, promotion, delivery, installation, service, or other distribution of the Products outside the Territory. Should the Distributor receive any inquiry for the Products outside the Territory, it shall contact the Supplier to determine how it should proceed.

4.4. The Supplier shall exercise its best efforts to fulfill the Distributor's orders for the Products but reserves the right to allot available inventory to other distributors and customers at its discretion.

§ V. PRICE AND TERMS OF SALE

5.1. The purchase price (the "Purchase Price") shall be negotiated by the Parties prior to the first delivery to the Distributor. Thereafter, the Purchase Price shall be clearly stated on the invoice sent to the Distributor for each delivery. All prices are exclusive of value-added tax and other applicable taxes, which shall be for the account of the Distributor unless otherwise agreed.

5.2. Any material prospective, proposed, or otherwise expected increase in the Purchase Price shall be communicated by the Supplier to the Distributor through written notice of at least Thirty (30) days before the expected increase. The Distributor shall have the option to continue this Agreement at the increased Purchase Price or to terminate the same through a Ten (10) day written notice. In the event the Distributor opts to terminate this Agreement, it shall have the right, but not the obligation, to purchase a One (1) month supply of the Products at the original Purchase Price.

5.3. Risk of loss, destruction, or deterioration of the Products shall pass to the Distributor either upon completion of delivery by the Supplier, if the Products are personally delivered to the Distributor, or upon the Supplier's tender of the Products to the carrier for shipment. The Supplier shall select the carrier unless the Distributor requests a reasonable alternative.

§ VI. PAYMENT INFORMATION

6.1. All charges shall be payable within ________ (________) days from the date stated on the Supplier's invoice, and all payments shall be made as follows:

________

6.2. The Supplier may impose a late payment penalty of ________ (________%) percent per month on any unpaid amounts that are due and demandable, pursuant to Articles 1169 and 1226 of the Civil Code of the Philippines.

§ VII. PERFORMANCE METRICS

7.1. The Distributor shall use reasonable commercial efforts to meet the following performance metrics (the "Performance Metrics"):

________

7.2. Failure of the Distributor to meet the Performance Metrics shall be a ground to renegotiate this Agreement or to remove the exclusivity rights of the Distributor.

§ VIII. SECURITY INTEREST

8.1. The Supplier shall retain a security interest over the Products delivered until payment therefor has been fully received, and shall have all the rights of a secured party in connection therewith pursuant to Republic Act No. 11057 (Personal Property Security Act) and its implementing rules and regulations.

8.2. Should the Distributor fail to pay for the Products, the Supplier is hereby authorized by the Distributor to peacefully enter the Distributor's premises to recover the Products, without prejudice to any other remedy which the Supplier may pursue under this Agreement or under law or equity.

§ IX. PROMOTIONAL MATERIALS AND ADVERTISING POLICY

9.1. The Supplier may from time to time provide the Distributor with promotional materials, as well as product and sales training, to assist in the sale and promotion of the Products.

9.2. The Distributor agrees to participate in and comply with the terms and conditions of any of the Supplier's promotional and marketing campaigns to increase the brand awareness and sales of the Products.

9.3. The Distributor may conduct its own advertising and promotional activities for the Products, provided that the same has been approved by the Supplier in advance, which approval shall not be unreasonably withheld.

§ X. INTELLECTUAL PROPERTY

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§ XI. WARRANTY

11.1. If any of the Products are proven, to the Supplier's satisfaction, to be defective at the time of sale and delivery to the Distributor, the Supplier shall, at the Distributor's discretion, adjust the original sales price of the defective Product or replace the same, in accordance with the warranty against hidden defects under Articles 1561 to 1571 of the Civil Code of the Philippines.

11.2. The Supplier shall provide the Distributor with information regarding the limited warranty extended to the original consumer of the Products, if any. The Distributor shall not make any representations or warranties to its customers regarding the Products other than those made by the Supplier and included in the packaging of the Products or any literature provided by the Supplier.

11.3. Except as herein provided, the Supplier makes no other warranties, express or implied, and disclaims any and all warranties, including the warranty of fitness for a particular purpose, to the extent permitted by law. This Section shall not be construed to derogate from the rights of consumers under Republic Act No. 7394 (Consumer Act of the Philippines).

§ XII. CONFIDENTIALITY

Each Party acknowledges and agrees that it and the other Party each possess certain non-public Confidential Information (as herein defined) and may also possess Trade Secret Information (as herein defined) (collectively, the "Proprietary Information") regarding their business operations and development. The Parties agree that the Proprietary Information is secret and valuable to each of their respective businesses. "Receiving Party" refers to the Party receiving the Proprietary Information and "Disclosing Party" refers to the Party disclosing the Proprietary Information.

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1. is known or available to the public at the time of disclosure or became known or available after disclosure through no fault of the Receiving Party;

2. is already known, through legal means, to the Receiving Party;

3. is given by the Disclosing Party to third parties, other than the Receiving Party, without any restrictions;

4. is given to the Receiving Party by any third party who legally had the Confidential Information and the right to disclose it; or

5. is developed independently by the Receiving Party and the Receiving Party can show such independent development.

B. "Trade Secret Information" shall be defined specifically as any formula, process, method, pattern, design, or other information that is not known or reasonably ascertainable by the public, consumers, or competitors and through which, because of such secrecy, an economic or commercial advantage can be achieved.

C. Both Parties agree that they shall:

1. Not disclose the Proprietary Information via any unauthorized means to any third party throughout the duration of this Agreement and the Parties' relationship with each other;

2. Not disclose the Confidential Information via any unauthorized means to any third party for a period of Three (3) years following the termination of this Agreement;

3. Not disclose the Trade Secret Information at any time, for as long as such information remains a trade secret under applicable law; and

4. Not use the Confidential Information or the Trade Secret Information for any purpose except those contemplated herein or expressly authorized by the Disclosing Party.

D. The Parties shall comply with Republic Act No. 10173 (Data Privacy Act of 2012) and its implementing rules and regulations with respect to any personal data that may be disclosed or processed in connection with this Agreement, and shall process such data only for the legitimate purposes contemplated herein.

§ XIII. INDEMNIFICATION

13.1. The Supplier shall indemnify and hold the Distributor free and harmless from, and shall defend against, any and all losses, claims, or damages of every kind arising out of any inherent defect, failure, or malfunction of the Products existing at the time the Products are sold by the Supplier to the Distributor, provided that the Distributor gives the Supplier immediate notice of any such loss, claim, or damage and fully cooperates with the Supplier in the handling thereof.

13.2. The Distributor shall indemnify and hold the Supplier free and harmless from, and shall defend against, any and all losses, claims, or damages of every kind arising out of or attributable, directly or indirectly, to the conduct, operations, performance, acts, or negligence of the Distributor and its agents, employees, dealers, or representatives in the installation, use, sale, or servicing of the Products, including any warranties or representations relating to the Products which exceed the Supplier's limited warranty.

§ XIV. FORCE MAJEURE

Neither Party shall be liable to the other for failure to perform any obligation under this Agreement due to causes beyond its reasonable control, including but not limited to fortuitous events, acts of God, acts of civil or military authorities, riots, embargoes, epidemics, pandemics, and natural disasters, in accordance with Article 1174 of the Civil Code of the Philippines.

§ XV. TERM AND TERMINATION

15.1. This Agreement shall commence on ________ and shall continue until ________. At the end of the term, this Agreement shall automatically renew until either Party gives a notice of termination at least Thirty (30) days prior to the date of renewal.

15.2. Either Party may terminate this Agreement for any reason or no reason at all prior to the natural expiration of the term upon the following notice: ________.

15.3. In the event that proper notice has not been submitted for termination, the terminating Party may still terminate this Agreement but hereby agrees to pay a monetary penalty of ________ (₱________) for such failure to provide proper notice.

15.4. A Party may terminate this Agreement at any time without prior notice upon the failure of the other Party to correct a breach of this Agreement within Thirty (30) days after receipt of written notice of the breach. If the breach is cured within said period, this Agreement shall continue in full force and effect.

15.5. The Supplier may likewise terminate this Agreement upon notice to the Distributor for any of the following:

1. The Distributor fails to meet the Performance Metrics;

2. The commencement of insolvency proceedings against the Distributor, whether voluntary or involuntary;

3. The failure of the Distributor to operate in the ordinary course of business for any reason;

4. The Distributor undergoes a material change in the structure of its business, including a change in ownership; and

5. The submission by the Distributor to the Supplier of any false statements or reports.

§ XVI. OBLIGATIONS UPON TERMINATION

16.1. Upon termination, the Distributor shall no longer be a distributor of the Supplier, and all unshipped orders shall immediately be cancelled without liability of either Party to the other.

16.2. All amounts owing to the Supplier by the Distributor shall not be affected by the termination or expiration of this Agreement, except that the same shall immediately become due and demandable notwithstanding any prior terms of sale.

16.3. The Supplier may, at its sole and exclusive discretion, repurchase the existing Products in the Distributor's inventory or require the Distributor to sell the Products to another distributor. The purchase price for such sale shall be the cost the Distributor paid for the Products. Such sale shall take place only if the Distributor has maintained the Products in good condition, subject to the Supplier's examination and approval.

§ XVII. RELATIONSHIP OF THE PARTIES

The relationship between the Supplier and the Distributor shall be that of vendor and vendee. The Distributor shall, under no circumstances, be considered an employee, agent, or representative of the Supplier and shall have no right to enter into any agreement or obligation on behalf of the Supplier.

§ XVIII. ASSIGNMENT

This Agreement, and the rights granted hereunder, may not be assigned, sold, leased, or otherwise transferred, in whole or in part, by either Party without the prior written consent of the other Party.

§ XIX. SUPPORTING DOCUMENTS AND ADDITIONAL ACTS

The Parties agree to execute such other documents as are reasonable and necessary for the proper implementation of this Agreement.

§ XX. NOTICES

Any notice required or permitted to be given under this Agreement shall be in writing and shall be deemed to have been duly given when delivered personally, sent by registered mail, or transmitted by electronic mail to the addresses of the Parties first written above, or to such other address as either Party may designate in writing. Notice shall be deemed received upon actual receipt, or in the case of registered mail, five (5) days after posting.

§ XXI. GOVERNING LAW

This Agreement shall be governed by, construed, and interpreted in accordance with the laws of the Republic of the Philippines.

§ XXII. DISPUTE RESOLUTION

Any dispute, controversy, or claim arising out of or relating to this Agreement, or the breach, termination, or invalidity thereof, shall first be settled amicably by the Parties through good faith negotiations. Should the Parties fail to reach an amicable settlement, the dispute shall be submitted to the exclusive jurisdiction of the proper courts of ________, to the exclusion of all other venues.

§ XXIII. SEVERABILITY

In the event that any provision of this Agreement is held to be invalid, illegal, or unenforceable, in whole or in part, the remaining provisions shall not be affected and shall continue to be valid, legal, and enforceable as though the invalid, illegal, or unenforceable parts had not been included herein.

§ XXIV. CUMULATIVE RIGHTS

The rights of the Parties under this Agreement and the law are cumulative and shall not be construed as exclusive unless otherwise required by law.

§ XXV. HEADINGS

Headings are for convenience only and do not affect the interpretation of this Agreement.

§ XXVI. SUCCESSORS AND ASSIGNS

This Agreement shall be binding upon and inure to the benefit of the successors and permitted assigns of both Parties.

§ XXVII. ENTIRETY OF AGREEMENT

This Agreement represents the entire agreement between the Supplier and the Distributor and supersedes all prior negotiations, representations, and agreements, whether oral or written.

§ XXVIII. AMENDMENTS AND MODIFICATIONS

This Agreement may be amended only by a written instrument signed and agreed upon by both Parties.

IN WITNESS WHEREOF, the Parties have hereunto affixed their signatures on the date and place first stated above.

________
Supplier

By:

________
________

________
Distributor

By:

________
________

SIGNED IN THE PRESENCE OF:

________          ________

ACKNOWLEDGEMENT

REPUBLIC OF THE PHILIPPINES )
PROVINCE OF ________ )
CITY OR MUNICIPALITY OF ________ ) S.S.

BEFORE ME, a Notary Public for and in the City or Municipality of ________, this ________ day of ________, 20________, personally appeared the following persons:

1. ________, the duly authorized representative of ________, with the following competent proof of identification: Driver's License with number ________ which expires on ________;

2. ________, the duly authorized representative of ________, with the following competent proof of identification: Driver's License with number ________ which expires on ________.

all known to me and to me known to be the same persons who executed the foregoing Distribution Agreement, consisting of ________ pages, including this page on which this Acknowledgement is written, and they acknowledged to me that the same is their free and voluntary act and deed, as well as the free and voluntary act and deed of the corporations they respectively represent.

WITNESS MY HAND AND SEAL on the day and place first above written.

Doc. No. ________;
Page No. ________;
Book No. ________;
Series of ________.