A Reseller or Distribution Agreement governs how products are marketed and sold through intermediaries, defining territories, pricing, and performance expectations. This playbook explains negotiation levers around exclusivity, revenue targets, and brand protection.
Why This Matters: Unclear termination terms can lead to disputes and operational disruption. Clearly defined rights protect each party’s interests on exit.
Negotiation strategy
If you're the Manufraturer:
Ensure termination rights align with business goals, including adequate notice and cure periods, and obligations upon termination.
If you're the Distributor:
Negotiate for reasonable notice and cure periods, and ensure transition assistance obligations are clearly defined.
Essential elements
1
Notice Period
Timeframe for termination notice.
2
Cure Period
Time to remedy breaches.
3
Transition Assistance
Support post-termination.
Action framework
ACCEPT
Propose edits if notice or cure periods are unreasonable.
EDIT
Reject if termination rights are overly restrictive.
ADD
Add if termination rights are missing or unclear.
PRO TIP
Always ensure termination clauses comply with jurisdiction-specific requirements.
Example clauses
FAVORABLE
Preferred Termination Clause
"Either party may terminate this Agreement for cause with a [30-day] notice period and a [15-day] cure period. Termination for convenience requires a [60-day] notice. Upon termination, the parties shall provide transition assistance as reasonably requested."
NEUTRAL
Fallback Termination Clause
"Termination for cause requires a [15-day] notice period. Termination for convenience requires a [30-day] notice. Transition assistance shall be provided as agreed upon by the parties."
UNFAVORABLE
Restrictive Termination Clause
"Termination is only allowed for cause with a [60-day] notice period and no cure period. No transition assistance is required."
Fallbacks
High-Risk Projects
In high-risk projects, ensure termination rights allow for quick exit to mitigate potential losses.
Long-Term Contracts
For long-term contracts, include flexible termination for convenience to adapt to changing circumstances.
Jurisdiction-Specific Requirements
Evaluate if the termination clause references specific jurisdictions that may affect enforceability. Adjust notice and cure periods or obligations as required by jurisdictional standards.
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