A Termination of Distribution Agreement is a crucial document used when parties wish to formally end their distribution relationship before its natural expiration or in accordance with the original agreement's termination provisions. This document is essential in the Canadian business context, where it must comply with both federal and provincial regulations governing commercial relationships. It typically becomes necessary due to various circumstances such as business restructuring, performance issues, market changes, or mutual agreement to end the relationship. The document covers critical aspects including termination date, handling of remaining inventory, outstanding financial obligations, customer transitions, and post-termination obligations. Given Canada's bi-juridical legal system, special attention must be paid to provincial variations, particularly in Quebec where civil law principles apply, as opposed to common law in other provinces.
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1. Parties: Identification of the supplier/manufacturer and distributor, including full legal names and registered addresses
2. Background: Reference to the original distribution agreement, its date, and brief context for the termination
3. Definitions: Key terms used throughout the agreement, including relevant defined terms from the original agreement
4. Termination Date: Specific date when the distribution agreement will terminate or the mechanism for determining such date
5. Mutual Release: Release of claims between parties relating to the distribution agreement
6. Outstanding Obligations: Treatment of any unpaid amounts, pending orders, and ongoing obligations
7. Inventory Handling: Provisions for dealing with remaining inventory, including buyback or sell-off periods
8. Confidentiality: Ongoing obligations regarding confidential information
9. Return of Materials: Requirements for returning any proprietary materials, documents, or equipment
10. Customer Transition: Process for handling existing customers and pending orders
11. General Provisions: Standard clauses including governing law, notices, and entire agreement
1. Intellectual Property: Provisions regarding the continued use or immediate cessation of trademarks, trade names, and other IP - include if IP was licensed under the original agreement
2. Non-Compete: Restrictions on future competitive activities - include if new non-compete terms are being established
3. Employee Matters: Provisions regarding employees or sales representatives - include if there are dedicated staff affected by the termination
4. Tax Considerations: Special tax provisions or allocations - include if there are significant tax implications
5. Dispute Resolution: Specific procedures for resolving disputes - include if standard court jurisdiction is not desired
6. Survival Clauses: Specific provisions from original agreement that will survive termination - include if different from standard survival terms
7. Territory Wind-Down: Specific provisions for multiple territories - include if distribution rights varied by territory
1. Schedule A - Product Inventory: Detailed list of current inventory and agreed handling method for each product category
2. Schedule B - Outstanding Purchase Orders: List of all pending orders and their agreed treatment
3. Schedule C - Account Reconciliation: Detailed financial reconciliation including all outstanding payments and credits
4. Schedule D - Customer List: List of current customers and agreed handling procedure
5. Schedule E - Transition Timeline: Detailed timeline for implementing various aspects of the termination
6. Appendix 1 - Original Distribution Agreement: Copy of the original distribution agreement being terminated
7. Appendix 2 - Assignment of Rights: Any necessary assignments or transfers of rights or obligations
Relevant legal definitions
Clauses
Relevant Industries
Retail
Consumer Goods
Manufacturing
Automotive
Electronics
Pharmaceuticals
Food and Beverage
Industrial Equipment
Technology
Fashion and Apparel
Construction Materials
Medical Devices
Chemical Products
Relevant Teams
Legal
Sales
Operations
Supply Chain
Finance
Compliance
Business Development
Distribution
Commercial
Risk Management
Relevant Roles
Chief Executive Officer
Commercial Director
Sales Director
Distribution Manager
Supply Chain Manager
Legal Counsel
Contract Manager
Business Development Manager
Operations Director
Chief Financial Officer
Procurement Manager
Regional Sales Manager
Compliance Officer
Risk Manager
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