Distribution Agreement in Singapore

• Important to determine if the distributorship is an exclusive one or not (i.e whether the distribution has the sole right to sell the products within a particular territory).
• Tension may arise where other distributors start approaching the supplier with more competitive terms so it will be useful to agree on how such situations will be addressed.

• Even if an exclusive distribution is secured, the supplier and distribution may wish to agree on a strategy to address parallel imports.
• Whilst parallel imports are prima facie not illegal in Singapore, this is a common cause of tension in distributorship agreements.

• The distributor should be given a license to use the IP for a limited period.
• One strategy in addressing parallel imports is to allege IP infringement in respect of non-authorised dealers.

Related Read: 5 Options for Protecting Your Intellectual Property in Singapore »

• Instagram, Facebook, and other social media platforms have become popular platforms for influencers to sell their products.
• If this is a channel of distribution, it is important to specify what support will be given when consumers have questions about the product or whether the distributor is an authorised dealer or not.

• Some common points of negotiations around supplier duties are
  1. after-sales support
  2. product liability coverage and
  3. payment terms

• Some common points of negotiations around distributor duties are
  1. minimum purchase obligation
  2. restrictions on the sale of competing products and
  3. budget on marketing campaigns

• Important to define the initial period of the distribution agreement, as well as the process for renewing the distribution agreement.
• Some suppliers tend to ‘jump ship’ or enter the territory directly after the distribution has invested substantial marketing efforts in the products.

• To set a clear process for the termination of the distributor agreement (whether for cause or without cause).