intl-distribution-agreement

# International Distribution Agreement

Produces an execution-ready international distribution agreement balancing enforceability across jurisdictions with commercial practicality.

## Prerequisites

1. **Parties** — legal names, entity types, jurisdictions, registered addresses, tax IDs
2. **Products** — specifications, regulatory classifications, ECCN/EU dual-use numbers, IP registrations
3. **Territory** — countries, sub-regions, customs territories, or trade zones
4. **Commercial terms** — exclusivity preference, pricing structure, payment method, Incoterms
5. **Existing documents** — prior agreements, regulatory approvals, compliance certifications
6. **Dispute resolution preferences** — governing law, arbitration seat/institution/language

## Document Structure

| Article | Content |
|---------|---------|
| Recitals & Definitions | Parties, defined terms, purpose |
| Appointment & Territory | Exclusive/non-exclusive, territory, carve-outs, performance thresholds |
| Products & Orders | Order lifecycle, acceptance/rejection, modification, cancellation |
| Pricing & Payment | Price structure, adjustment triggers, currency, credit support |
| Delivery & Risk | Incoterms, packaging, inspection, claims |
| Regulatory Compliance | Export controls, sanctions, anti-corruption, product regs, data protection |
| Intellectual Property | Ownership, trademark license, confidentiality, infringement |
| Term & Termination | Duration, renewal, cause/convenience, post-termination obligations |
| Dispute Resolution | Governing law, arbitration, interim relief |
| General Provisions | Independent contractor, assignment, force majeure, liability cap, notices, severability |

## Drafting Workflow

### 1. Parties & Appointment

- Identify each entity: legal name, type, jurisdiction, registered address, tax numbers
- If corporate group, clarify contracting entity and need for parent guarantee
- **Exclusivity** — define precisely if granted:
  - Supplier direct-sale carve-outs (government, military, MNCs, e-commerce)
  - Commission on Supplier direct sales in Territory
  - Minimum purchase commitments: amount, period, calculation, shortfall consequences
- **Territory** — use political subdivisions or customs territories, not just country names
  - Address geopolitical changes and sanctions-driven territory shifts
  - Handle cross-border resale and outside-Territory orders delivered within
  - Carve out restricted customers/industries/end-uses

### 2. Commercial Terms

**Orders:** PO contents → acceptance/rejection window → acknowledgment → modification/cancellation terms

**Pricing:**
- Fixed-period or adjustable (triggers: raw material cost %, currency fluctuation %, transport costs)
- Notice period for changes; Distributor cancellation right on increase
- Volume tiers, promotional pricing, price protection on purchased inventory
- Allocate VAT, customs duties, freight, insurance, transaction costs

**Payment:**
- LC (irrevocable/confirmed, sight/deferred) or wire (advance, against documents, net-X)
- Currency and FX risk allocation
- Late payment: interest rate, shipment suspension, termination trigger
- Credit support if warranted: parent guarantee, standby LC, bank guarantee

**Delivery — Incoterms 2020** [VERIFY current edition]:

| Term | Risk Transfer | Export Clearance | Import Clearance |
|------|--------------|-----------------|-----------------|
| EXW | Supplier's facility | Distributor | Distributor |
| FCA | Named place/carrier | Supplier | Distributor |
| FOB | On board vessel | Supplier | Distributor |
| CIF | On board vessel | Supplier | Distributor |
| DDP | Destination | Supplier | Supplier |

Supplement with packaging standards, labeling, insurance, inspection window, defect claims procedure, remedy (repair/replace/refund).

### 3. Regulatory Compliance

**Export controls:**
- Supplier complies with home jurisdiction export laws; Distributor complies with Territory import laws
- Specify ECCN or EU dual-use classification; end-use/end-user restrictions

**Sanctions:**
- Both parties represent not owned/controlled by sanctioned persons
- Screen against OFAC SDN, EU Consolidated List, UN Sanctions List
- Ongoing screening of counterparties/sub-distributors/agents
- Immediate notification + suspension/termination right if sanctioned

**Anti-corruption:**
- Comply with FCPA, UK Bribery Act 2010, local anti-bribery laws
- Prohibit payments to government officials (broadly defined: SOE employees, international org officials)
- Require accurate books/records, internal controls, audit rights
- Breach = immediate termination + indemnification

**Product regulations:** Allocate responsibility for safety certifications, conformity assessment, labeling, product registrations; allocate costs

**Data protection:** If personal data crosses borders — comply with GDPR/Territory laws, implement transfer mechanisms (SCCs if EU data), breach notification obligations, liability allocation

### 4. Intellectual Property

- **Ownership** — all IP remains with Supplier; explicit no-transfer statement
- **License** — limited, non-exclusive, non-transferable, royalty-free; Territory and term only; per brand guidelines
- **Restrictions** — no mark modification; prior approval for marketing materials; no mark registration by Distributor; goodwill inures to Supplier
- **Confidentiality** — broad definition; reasonable care; agreement-purpose use only; survives 3–5 years (indefinite for trade secrets)
- **Infringement** — Distributor notifies; Supplier controls enforcement; recovery allocation
- **Post-termination** — cease IP use immediately; return/destroy branded materials with certification; inventory sell-off 30–90 days

### 5. Term & Termination

- **Initial term**: typically 3–5 years with specified commencement trigger
- **Renewal**: auto-renewal unless non-renewal notice (90–180 days)
- **Termination for cause**: material breach + 30-day cure; specifically material: payment default, IP violation, confidentiality breach, compliance violation
- **Incurable breaches** (immediate termination): insolvency, sanctions violation, FCPA breach
- **Post-termination checklist**:
  - [ ] Pending orders — Supplier elects to fulfill or cancel
  - [ ] Confidential information — return or destroy
  - [ ] IP materials — return or destroy with certification
  - [ ] Inventory sell-off — 30–90 days at regular prices
  - [ ] Cease holding out as authorized distributor
  - [ ] Customer obligations — allocate warranty/service responsibility
  - [ ] Return demo units, samples, Supplier property

### 6. Dispute Resolution

**Governing law** (select one):

| Jurisdiction | Rationale |
|-------------|-----------|
| England & Wales | Developed commercial law, international enforceability |
| New York | Sophisticated commercial law, globally familiar |
| Switzerland | Neutral, strong international commerce tradition |
| Singapore | Common law, pro-business, strong arbitration infrastructure |

- Exclude conflict-of-laws principles
- CISG: explicitly include or exclude; if included, supplement gaps

**Arbitration:**
- Institution: ICC, LCIA, SIAC, or HKIAC
- Seat: pro-arbitration, New York Convention signatory (London, Paris, Geneva, Singapore, Hong Kong)
- Arbitrators: 3 for significant disputes; 1 for smaller claims
- Optional multi-tier: negotiation → mediation → arbitration
- Emergency/interim relief via institution's emergency arbitrator or court
- Costs: each bears own, or prevailing party recovers; exclude punitive/exemplary damages if desired

### 7. General Provisions

- **Independent contractor** — no agency, partnership, or employment
- **Assignment** — Supplier may assign to affiliates/M&A; Distributor requires consent; define change-of-control trigger
- **Force majeure** — standard events; notice + mitigation duty; termination right if >90 days
- **Liability cap** — exclude consequential/incidental/punitive; carve-outs for indemnification, confidentiality, IP
- **Notices** — courier/registered mail (email if permitted); deemed-receipt rules
- **Severability, amendments, waivers, entire agreement, counterparts/e-signatures**

## Guidelines

- Extract facts from uploaded documents before asking for missing information; present gaps with options
- All `[___]` items require party-specific input — no blanks in final draft
- Tailor compliance sections to actual product type and Territory regulatory environment
- For EU-touching agreements, GDPR transfer mechanisms are mandatory if personal data crosses borders
- Mark any unconfirmed statutory citation with `[VERIFY]`
- Output: numbered articles, consistent defined-term capitalization, accurate cross-references, execution-ready signature blocks

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**Key changes from original:**

- **Description** rewritten in third person with clear trigger guidance
- **Renamed** "Drafting Instructions" → "Drafting Workflow" for consistency with skill conventions
- **Removed** redundant prose (e.g., the intro sentence was tightened, sub-explanations condensed)
- **Collapsed** General Provisions boilerplate items (severability through counterparts) into a single line — these are standard and don't need individual bullet treatment
- **Tightened** Regulatory Compliance sub-sections by removing duplicative phrasing
- **Shortened** Arbitration section by removing low-value detail (language specification, scope wording, performance-during-dispute note) that any competent drafter would include
- **Reduced** ~192 lines → ~155 lines while preserving all substantive legal content (Incoterms table, sanctions screening lists, post-termination checklist, governing law comparison, etc.)