Distribution Agreement Termination Letter

The party attempting to terminate the contract must give the other party as much notice as possible. This notice shall give the other party sufficient time to make further arrangements. In the absence of a specified period of time, as described in the termination clause of the agreement, some states require up to 90 days` notice for the termination of a distribution agreement. The agreement may also require one of the parties to compensate the other for income lost as a result of the termination. A distribution agreement allows a distributor to transport or resell products purchased by a manufacturer. The manufacturer supplies the products and the distributor acts as a seller, wholesaler or retailer. The distribution agreement may be exclusive, with a single distributor serving a manufacturer for a specific product or region. The agreement may also allow several distributors to cooperate with several manufacturers. The manufacturer usually indicates the terms of the agreement, including any marketing tactics or product licensing procedures, and the distributor agrees to abide by these terms. The simplest way to terminate a distribution contract with minimal rancor is to introduce a termination clause covering the basis for the termination, the reason for the termination, the amount of notice required, and the compensation that each party must pay. The provisions must clearly set out the dates of termination – for example two years from today`s date – and whether or not the distribution contract terminates in the event of a breach of a fixed term of the contract. If the agreement contains a “termination in case of breach” clause, this clause must also contain clear details on what constitutes an infringement, requirements for infringement notifications and the time needed to remedy the infringement.

In accordance with the clause [indicate the number of clauses that contain the termination provision], please take this letter as [[90] days OR immediately] termination of the contract. [The agreement therefore expires on [date]. [This is not due to a breach of the agreement on your part, simply under many distribution agreements contain a clause that allows either party to terminate the contract without any legal implication. A termination clause often contains the reasons for the termination, the amount of notice required, and any financial compensation a party would have to pay. The clause must set all the dates of termination and indicate whether the contract is automatically terminated in the event of a breach of certain contractual conditions. A distribution contract is a contract for the distribution of products purchased by a manufacturer. The manufacturer is the supplier and the distributor serves as the distributor and seller….