Letter of Intent for Distribution Agreement Template

Letter of Intent for Distribution Agreement Template

[Supplier Legal Name]
[Street Address]
[City, State/Province, ZIP/Postal Code, Country]
Phone: [Supplier Phone Number]
Email: [Supplier Email Address]

[Date]

[Distributor Legal Name]
[Street Address]
[City, State/Province, ZIP/Postal Code, Country]

Re: Letter of Intent for Distribution Agreement – [Product Line / Brand Name]

Dear [Distributor Contact Name or “Sir/Madam”],

This Letter of Intent (“LOI”) sets forth certain preliminary terms and conditions under which [Supplier Legal Name] (“Supplier”) and [Distributor Legal Name] (“Distributor,” and together with Supplier, the “Parties”) propose to negotiate a distribution relationship regarding the products described below (the “Products”). Except as expressly stated in Section 11 (Binding and Non-Binding Provisions), this LOI is intended as a non-binding outline of key business terms and a basis for preparing a definitive distribution agreement (the “Distribution Agreement”).

1. Parties and Purpose

1.1 Supplier
Legal Name: [Supplier Legal Name]
Entity Type: [Corporation / LLC / Partnership / Other]
Jurisdiction of Organization: [Jurisdiction]
Principal Address: [Supplier Address]

1.2 Distributor
Legal Name: [Distributor Legal Name]
Entity Type: [Corporation / LLC / Partnership / Other]
Jurisdiction of Organization: [Jurisdiction]
Principal Address: [Distributor Address]

1.3 Purpose
The Parties intend to establish a distribution relationship under which Distributor will purchase Products from Supplier for resale in the Territory (defined below), subject to the terms to be set out in the Distribution Agreement.

2. Products and Territory

2.1 Products
The distribution arrangement is expected to cover the following products or product lines:

• [Product Category or Line 1]

• [Product Category or Line 2]

• [Additional products, if any]

The final list of Products will be set out in the Distribution Agreement and may be updated from time to time by mutual written agreement.

2.2 Territory
Distributor will be authorized to market and sell the Products in the following territory (the “Territory”):

Territory: [Countries / Regions / States / Named Territory]

3. Appointment and Exclusivity

3.1 Appointment of Distributor
Supplier intends to appoint Distributor as a [exclusive / non-exclusive / sole] distributor of the Products in the Territory, subject to the Distribution Agreement.

3.2 Exclusivity (If Applicable)
If the Parties agree to exclusivity, the basic expectations are:

• Exclusivity Scope: [Exclusive / Sole distribution rights for specified Products and/or channels in the Territory].

• Conditions: [Example: subject to Distributor meeting minimum purchase targets, performance metrics, or other conditions].

The final exclusivity terms and any related performance requirements will be defined in the Distribution Agreement.

4. Term and Renewal (Indicative)

4.1 Initial Term
The initial term of the Distribution Agreement is expected to be:

Initial Term: [Number] years from the effective date of the Distribution Agreement.

4.2 Renewal
The Distribution Agreement may provide for renewal periods of [Number] years each, subject to mutually agreed conditions such as meeting performance targets and timely notice of renewal.

5. Pricing, Discounts, and Payment Framework

5.1 Pricing and Discounts
Supplier will sell Products to Distributor according to a pricing structure to be defined in the Distribution Agreement, which may include:

• Base price list: [Reference to Supplier’s price list or attached schedule].

• Distributor discount or margin: [Percentage or formula].

• Volume or promotional discounts: [If applicable].

5.2 Payment Terms
Indicative payment terms are:

• Payment Method: [Bank transfer / other agreed method].

• Payment Terms: [e.g., net 30 days from invoice date].

• Currency: [Currency for invoicing and payment].

Final pricing and payment terms will be set out in the Distribution Agreement and may be updated by written notice in line with agreed procedures.

6. Orders, Delivery, and Risk of Loss

6.1 Purchase Orders
Distributor will place purchase orders for Products in accordance with procedures set out in the Distribution Agreement, which may include:

• Minimum order quantities;

• Lead times for standard and rush orders;

• Forecasting requirements.

6.2 Delivery Terms
Delivery terms (Incoterms or equivalent) are expected to be:

Delivery Terms: [Example: EXW / FOB / CIF / DAP + named location].

6.3 Risk of Loss
Risk of loss and title to the Products will pass according to the agreed delivery terms and will be specified in the Distribution Agreement.

7. Responsibilities of Distributor and Supplier

7.1 Distributor Responsibilities
Distributor is expected to:

• Use reasonable efforts to promote, market, and sell the Products in the Territory;

• Maintain a sales force and/or distribution network appropriate for the Territory;

• Provide first-line customer service and after-sales support to local customers;

• Maintain suitable inventory levels to meet anticipated customer demand;

• Comply with all applicable laws and regulations relating to the marketing and sale of the Products in the Territory.

7.2 Supplier Responsibilities
Supplier is expected to:

• Supply Products to Distributor in accordance with accepted orders and agreed lead times;

• Provide product information, specifications, and training materials as reasonably needed;

• Provide reasonable technical support and assistance related to the Products;

• Maintain product quality standards consistent with specifications and applicable law.

8. Marketing, Branding, and Trademarks

8.1 Marketing Activities
Distributor will conduct marketing activities in the Territory at its own expense, subject to brand guidelines provided by Supplier. The Distribution Agreement may describe any cooperative marketing activities or marketing support from Supplier.

8.2 Use of Trademarks
Distributor may use Supplier’s trademarks, trade names, and branding solely in connection with the promotion and sale of the Products in the Territory, subject to written brand guidelines and any license terms in the Distribution Agreement. Distributor will not acquire any ownership rights in such marks.

9. Compliance and Regulatory Matters

The Parties acknowledge that distribution of the Products must comply with all applicable laws and regulations. Each Party agrees to:

• Comply with applicable trade, export, and import laws;

• Comply with applicable anti-bribery and anti-corruption laws;

• Maintain any licenses, permits, or registrations required for its activities related to the Products and the Territory.

10. Confidentiality

The Parties may exchange confidential or proprietary information in connection with this LOI and the proposed Distribution Agreement.

• Each Party will treat the other Party’s non-public information as confidential;

• Such information will be used only for evaluating and implementing the distribution relationship;

• Disclosure will be limited to personnel and advisors with a need to know who are bound by comparable confidentiality obligations.

If the Parties have already signed a separate non-disclosure agreement, that agreement will continue to govern the exchange and use of confidential information.

11. Binding and Non-Binding Provisions

11.1 Non-Binding Business Terms
Except as provided in Section 11.2, this LOI is non-binding and does not obligate either Party to:

• Enter into the Distribution Agreement;

• Proceed with the distribution relationship; or

• Complete any transaction described in this LOI.

All commercial and operational terms summarized above are subject to further negotiation and to the execution of the Distribution Agreement.

11.2 Binding Provisions
The Parties intend that the following provisions of this LOI will be legally binding once this LOI is signed and delivered by both Parties:

• Section 6.3 (Risk of Loss), to the extent any specific binding agreement on transfer of risk is included here;

• Section 9 (Compliance and Regulatory Matters), to the extent it establishes immediate obligations;

• Section 10 (Confidentiality);

• This Section 11.2 (Binding Provisions);

• Section 12 (Governing Law and Dispute Resolution); and

• Any additional terms expressly identified here as binding: [Additional binding clauses, if any].

All other provisions of this LOI are intended only as a statement of current intent and may be modified, supplemented, or omitted in the Distribution Agreement.

12. Governing Law and Dispute Resolution

Governing Law: [State/Province, Country]

Any dispute arising out of or relating to the binding provisions of this LOI will be resolved in:

Dispute Resolution Forum: [Court or Arbitration Forum and Location]

13. Expiration and Next Steps

13.1 Expiration
If this LOI is not signed by both Parties on or before:

Expiration Date: [Expiration Date]

it will be of no further force or effect, unless extended or renewed in writing signed by both Parties.

13.2 Next Steps
If this LOI is signed, the Parties will use commercially reasonable efforts to:

• Complete any remaining due diligence;

• Prepare and negotiate the Distribution Agreement;

• Finalize and execute the Distribution Agreement by [Target Date].

14. Signatures

If the terms of this LOI are acceptable as a basis for preparing the Distribution Agreement, please sign below to indicate your agreement to the binding provisions in Sections 10, 11, and 12 and your agreement in principle to the non-binding business terms described above.

Supplier

[Supplier Legal Name]

By: _______________________________
Name: [Authorized Signatory Name]
Title: [Title]
Date: [Date]

Distributor

[Distributor Legal Name]

By: _______________________________
Name: [Authorized Signatory Name]
Title: [Title]
Date: [Date]