The Distribution Agreement serves as a critical legal framework for businesses looking to establish or formalize their distribution networks in Indonesia. This document is essential when a company (Principal/Supplier) wishes to appoint another entity (Distributor) to sell and distribute their products within specified Indonesian territories. The agreement must comply with Indonesian law, particularly the Law No. 7 of 2014 on Trade and relevant Ministry of Trade regulations. It covers crucial elements including appointment terms, territorial rights, pricing structures, minimum purchase commitments, marketing obligations, and compliance requirements. The Distribution Agreement is particularly important in Indonesia due to specific local regulations governing distribution relationships, foreign investment restrictions, and mandatory registration requirements. It provides both parties with clear guidelines on their rights, obligations, and operational parameters while ensuring compliance with local legal and regulatory frameworks.
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1. Parties: Identification of the Principal/Supplier and Distributor with complete legal details
2. Background: Context of the agreement, business relationship, and general intentions of the parties
3. Definitions and Interpretation: Key terms used throughout the agreement and rules of interpretation
4. Appointment and Territory: Scope of distributor appointment and defined territorial limits
5. Rights and Obligations of Principal: Principal's commitments regarding supply, support, and training
6. Rights and Obligations of Distributor: Distributor's commitments regarding sales, marketing, and market development
7. Products: Description of products covered by the agreement
8. Ordering and Delivery: Procedures for ordering, delivery terms, and logistics arrangements
9. Prices and Payment: Pricing structure, payment terms, and currency provisions
10. Intellectual Property Rights: Usage rights for trademarks, patents, and other IP
11. Confidentiality: Protection of confidential information and trade secrets
12. Term and Termination: Duration of agreement and termination provisions
13. Post-Termination: Obligations and rights after agreement ends
14. Force Majeure: Provisions for unforeseen circumstances preventing performance
15. Governing Law and Dispute Resolution: Choice of Indonesian law and dispute resolution mechanisms
16. General Provisions: Standard boilerplate clauses adapted to Indonesian law requirements
1. Exclusivity: Used when granting exclusive distribution rights in territory
2. Minimum Purchase Requirements: Include when setting specific sales targets or minimum order quantities
3. Marketing and Promotion: Detailed marketing obligations when specific promotional commitments are required
4. Training and Support: When comprehensive training programs are part of the arrangement
5. Product Registration: For products requiring regulatory registration in Indonesia
6. Insurance: Specific insurance requirements beyond standard coverage
7. Bank Guarantee: When financial security is required from distributor
8. Anti-Corruption Compliance: Enhanced compliance provisions for regulated industries
9. Data Protection: When handling sensitive customer or business data
10. Environmental Compliance: For products with environmental impact or regulations
1. Schedule 1 - Products: Detailed list of products, specifications, and pricing
2. Schedule 2 - Territory: Detailed description of geographical territory and any exclusions
3. Schedule 3 - Minimum Purchase Quantities: Annual or periodic minimum purchase commitments
4. Schedule 4 - Price List: Current prices and discount structures
5. Schedule 5 - Marketing Plan: Agreed marketing strategies and commitments
6. Schedule 6 - Technical Requirements: Product handling, storage, and technical specifications
7. Schedule 7 - Service Level Agreement: Performance metrics and service standards
8. Schedule 8 - Authorized Sub-distributors: List of approved sub-distributors if permitted
9. Appendix A - Standard Operating Procedures: Operational procedures and requirements
10. Appendix B - Reporting Templates: Standard forms for required reports and communications
Relevant legal definitions
Clauses
Relevant Industries
Consumer Goods
Electronics
Automotive
Pharmaceuticals
Food and Beverage
Industrial Equipment
Technology
Fashion and Apparel
Construction Materials
Agricultural Products
Medical Devices
Chemicals
Telecommunications
Software and Digital Products
Retail
Relevant Teams
Legal
Commercial
Sales
Operations
Supply Chain
Compliance
Finance
Business Development
Procurement
Distribution
Risk Management
International Trade
Customer Service
Quality Assurance
Relevant Roles
Chief Executive Officer
Commercial Director
Sales Director
Legal Counsel
Business Development Manager
Operations Director
Supply Chain Manager
Compliance Officer
Regional Sales Manager
Contract Manager
Distribution Manager
Country Manager
General Manager
Chief Financial Officer
Procurement Manager
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