The Limited Risk Distribution Agreement is designed for businesses operating in Hong Kong that wish to establish a distribution relationship while maintaining controlled risk exposure for the distributor. This document is particularly relevant when a supplier wants to expand their market presence in Hong Kong or Asia while providing their distributor with certain risk protections. The agreement incorporates specific provisions aligned with Hong Kong's legal framework, including the Contracts Ordinance and Competition Ordinance, while addressing key commercial aspects such as territory rights, performance targets, and risk allocation. It's commonly used in situations where the distributor requires protection against market fluctuations, inventory risks, or currency exposure, while still maintaining their role as an independent distributor rather than an agent.
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1. Parties: Identification of the supplier/manufacturer and distributor, including full legal names and registered addresses
2. Background: Context of the agreement, relationship between parties, and general business purpose
3. Definitions: Defined terms used throughout the agreement, including territory, products, and specific commercial terms
4. Appointment and Territory: Scope of distributor's appointment, exclusivity status, and defined territory
5. Term and Termination: Duration of the agreement, renewal provisions, and termination circumstances
6. Distributor Obligations: Core responsibilities including minimum purchase requirements, marketing obligations, and performance standards
7. Supplier Obligations: Supplier's commitments regarding product supply, support, and training
8. Ordering and Delivery: Process for placing orders, delivery terms, and acceptance procedures
9. Prices and Payment: Pricing structure, payment terms, and currency specifications
10. Risk Allocation: Specific provisions limiting distributor's risk and defining risk-sharing mechanism
11. Intellectual Property Rights: Usage rights for trademarks, branding, and other IP
12. Confidentiality: Protection of confidential information and trade secrets
13. Compliance: Regulatory compliance requirements and anti-corruption provisions
14. Governing Law and Jurisdiction: Hong Kong law as governing law and jurisdiction for disputes
1. Marketing and Promotion: Detailed marketing requirements and cost-sharing arrangements, needed when specific marketing commitments are required
2. Product Training: Training obligations and procedures, included when products require technical expertise
3. After-Sales Service: Service and warranty obligations, needed for technical or complex products
4. Non-Competition: Restrictions on competing activities, included when exclusivity is important
5. Data Protection: Specific data handling requirements, needed when personal data processing is involved
6. Force Majeure: Provisions for unforeseen circumstances, particularly relevant in international distribution
7. Insurance: Specific insurance requirements, included when risk profile requires additional coverage
8. Change Control: Procedures for changing agreement terms, useful for long-term arrangements
1. Products Schedule: Detailed list of products covered by the agreement, including specifications
2. Price List: Current pricing structure and any volume-based discounts
3. Territory Map: Detailed definition and/or map of the distribution territory
4. Performance Targets: Specific sales targets and performance metrics
5. Service Level Agreement: Detailed service standards and response times
6. Technical Requirements: Product handling, storage, and technical specifications
7. Trademark Usage Guidelines: Specific rules for using supplier's trademarks and branding
8. Risk Matrix: Detailed breakdown of risk allocation between parties
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