A contract between the manufacturer and the distributor is called a dealer agreement. Read 3 min Ensuring that there is a strong Manufacturing License Agreement (MLA) is essential to protect the rights of the inventor and intellectual property while protecting financial compensation and the rights of the manufacturer. Maybe your business started on Etsy and created homemade jewelry or interior design. For a while, you can create the items yourself from home. But due to the wonders of word of mouth and social media, your business has grown beyond the point where you`re able to handle all incoming orders yourself. So it`s time to outsource to a small manufacturing company. D. The parties wish to set out their agreements in writing. A clear, well-written contract is the best way to protect your business when entering into a manufacturer-dealer partnership. While the complexity of the agreement makes working with a lawyer crucial, your personal involvement – especially during contract negotiations – is just as important. A basic understanding of what a manufacturer-dealer agreement entails and what should be included in a well-designed agreement is a useful starting point. A manufacturing and distribution license agreement is an agreement or contract between the natural or legal person who invented a product and the company that will manufacture or build and distribute that item. This is a necessary agreement that must be made when an inventor decides not to build his product himself.
(a) Subject to the terms of the License Agreements, LBC is GB`s exclusive primary distributor for all Products for sale in the Territory as defined below. LBC has the right to engage other subcontractors to provide sales and marketing plans in the territory and other services for the distribution of products, including, but not limited to, all sales and marketing for all wholesale and retail sales, online sales, packaging, distribution in the territory, on-site and off-site distribution, product design and merchandise presentations. In December 2010, Kraft Foods sued Starbucks to prevent Starbucks from ending a 13-year relationship for the packaging and distribution of Starbucks coffee products in grocery stores. Although the agreement between the manufacturer and the dealer contains a termination provision, vague wording or the context of the words may have opened the door to conflicting interpretations. The fact that this conflict developed into a previously successful relationship highlights not only the importance of a clear termination provision, but also the importance of using simple and straightforward language in each contractual clause. Termination, renewal and pricing are among the most important points that must be included in contract negotiations. According to management and legal consultant Glen Balzer, the best distribution agreements allow both parties to terminate the agreement for cause or convenience. This avoids legal disagreements about the existence of a reason or responsibility for the cause. Balzer also says that an auto-renewal clause isn`t always the best idea. An alternative is to link renewal to performance measures.
It is also important to deal with price adjustment procedures. For example, if you allow a manufacturer to increase prices after a 30-day notice period, the possibility of conflict is excluded and the principle of fairness in the partnership is strengthened. While many companies publicly describe a manufacturer-dealer relationship as a strategic partnership, most are temporary joint ventures and not a true legal partnership. A clause in the agreement usually specifies the duration of the relationship and whether the agreement can be renewed automatically. If that is the case, the agreement shall provide for a time limit for indicating the intention not to be renewed and shall fix the duration of the renewal period […].