Drafting And Negotiating Distribution Agreements: Common Mistakes That Lead To Litigation

Distribution partnerships, like marriages, are entered into during a period of optimism and excitement. You have a great product and you found the right partner who will help you take it to the masses. It's a relationship that will last a lifetime, right? Maybe. As with any relationship, failure to communicate expectations or poorly communicating expectations can lead to conflict and, in some circumstances, it leads to business divorce litigation.

The following are five areas that are often overlooked when drafting and negotiating distribution agreements. The failure to address these areas can result in costly and protracted litigation.

The Scope of the Relationship

Determine and expressly address whether the distributor can assign or delegate its rights and obligations under the distribution agreement, for example, by appointing a subdistributor. Subdistributors can have a detrimental effect on a manufacturer by reducing the manufacturer's control over