The dealer agreement is represented by a special contract drawn up between the manufacturer of any goods and the company, which acts as an official intermediary between the manufacturer and direct consumers. With such cooperation, the ownership of the goods sold under such an agreement passes initially to the dealer, and only after that he sells it to end customers. The dealer agreement must contain some prerequisites. These include information about the parties to the transaction, their rights and obligations, responsibilities and rules for transferring funds for goods.
Concept of contract
The dealer agreement is drawn up between the intermediary and the manufacturer of the goods. It governs the relationship between two parties to a transaction. The features of this contract include the following:
- it combines the features of other agreements, which include the contract of sale and barter;
- when drafting it, especially much attention is paid to the rights and obligations that appear at the dealer, therefore usually such a document is lengthy;
- The dealer can be a large wholesale company, individual entrepreneur or private individual.
It is the dealer who will be able to represent the interests of the manufacturer in the market of a particular region, as well as sell its goods at the best prices. He will be able to count on significant discounts, so he collaborates not only with direct users, but also with retail organizations.
Essence of the contract
Dealer agreement can be standard or exclusive. In the first case, the same conditions are offered to each company with which the manufacturer enters into an agreement. Exclusive conditions are offered only to the largest companies.
A dealer can be not only a company, but also an individual. A classic dealer communicates directly with representatives of a manufacturing company. The emerging relationship is not only in the supply of goods, but also in the organization of wholesale sales in the region.
Legislative regulation
A dealer agreement on the territory of the Russian Federation should be drawn up taking into account certain requirements of the law. These include:
- Law Federal Law No. 39 “On the Securities Market” includes information on who can become a dealer, as well as how manufacturers officially cooperate with large wholesale trading companies;
- some of the provisions of the Civil Code relating to official contracts apply to dealer contracts;
- such an agreement is mixed, therefore, combines the features of other agreements.
Although the legislation does not stipulate any specific form of this contract, some information must be entered into it without fail. Without these details, the document will not have legal force.
Parties to the agreement
This information is significant for any dealer agreement. A manufacturing company can conclude a contract both with a legal entity and with an individual entrepreneur. Additionally, by law, even an individual can act as a dealer.
Under the contract, the manufacturer undertakes to sell goods at wholesale prices on pre-agreed conditions. The intermediary undertakes to periodically make large purchases, after which the purchased goods are sold to retail companies or direct consumers.
What are the benefits of a dealer?
The terms of the dealer agreement provide certain advantages to the wholesale buyer.These advantages include:
- the manufacturer offers really high discounts, so there is an opportunity to buy goods at affordable prices;
- the dealer independently chooses which products from all assortment positions will be purchased;
- companies that conclude such an agreement have the right to represent the interests of a manufacturing company in any region.
It is due to the significant difference between the purchase price and the selling price that the company receives high profit from activities.
Dealer Responsibilities
The text of the dealer agreement will certainly include information provided by the various responsibilities of the dealer. These include:
- selling purchased goods only at prices that are given in the agreement;
- the use of different methods for advertising and promoting products;
- preparation and transfer of a production company certain reports on the activities of the company;
- customer service based on the requirements of the manufacturer;
- observance of trade secrets.
If, for various reasons, these obligations are not respected, this leads to early termination of cooperation.
Responsibilities of a manufacturing enterprise
The dealership agreement includes the responsibilities of the direct seller of the goods. These include:
- providing the intermediary with the right amount of goods at wholesale prices based on the terms of the agreement;
- the need to inform the counterparty of various changes in the quality or cost of goods sold;
- transfer of free samples, which allows you to make a presentation if necessary.
All these factors are certainly prescribed in the text. A fragment of a sample dealer agreement is presented below.
Subject of the contract
Particular attention is paid to the information provided by the subject of the contract. When entering information, the nuances are taken into account:
- it is precisely indicated which goods will be purchased from the manufacturing organization;
- a specification is used as an annex to the contract;
- It is allowed to change or supplement the list of goods;
- goods after payment becomes the property of the dealer, therefore it is the intermediary who is further engaged in the sale of items in the territory of a region.
Additionally, the text may indicate the main characteristics that the goods should possess. If the items do not meet these parameters, then the intermediary company may insist on receiving a forfeit or even early termination of cooperation.
Cost of goods
Under a dealership agreement with a web studio or other organization, goods at substantial discounts should be offered. Therefore, dealers should buy at a lower price than other wholesale or retail customers.
The text directly indicates which discount is provided to the wholesale buyer. The cost of each assortment item must be in the specification or in another annex to this contract.
Settlement and Delivery Procedure
When drawing up a dealer agreement, the following data is included:
- the way in which goods are paid for, for which cash or wire transfers can be used;
- if the manufacturer offers a deferred payment, then its duration is indicated;
- the consequences of the lack of payments are given, namely, the amount of the penalty in case of delay;
- it is indicated in what way the deliveries will be carried out, since rail or road transport can be used for this;
- if there is an overdue debt, the manufacturer may refuse to ship the following consignments.
Additionally, the rules for the return of defective or damaged goods are specified. Data on the acceptance of items is provided.
Responsibility of the parties to the contract
The dealer agreement will certainly include data on what is the responsibility of each participant. To do this, the following information is recorded:
- the amount of the penalty or penalty paid by the dealer if he violates the payment deadline for the delivered goods, and a penalty is charged from the moment when the supplier sends the counterparty the corresponding claim in writing;
- additionally, the penalty levied for each violation by the dealer is indicated, and its amount can be determined in a solid cash amount or on the basis of a percentage ratio to the transaction amount;
- if the intermediary violates the rules for the use of a trademark owned by a manufacturing company, then punishments are applied to him in the framework of the current Russian legislation;
- if the delivery time is violated by the manufacturing enterprise, the dealer can expect to receive money in the form of fines or forfeits.
Even if one of the parties to the agreement pays interest or penalties, this is not grounds for termination of the contract.
Dispute Resolution Method
If two companies have entered into a dealership agreement, then this cannot protect them from possible disagreements and disputes in the future. Therefore, before signing this agreement, it is recommended to include in it information about the ways in which emerging disagreements will be resolved. It is most optimal to include the following data in the text:
- Initially, the parties should try to resolve the disagreements in a peaceful way, for which they are negotiating, as well as various additional agreements;
- if this method does not give the desired result, then a lawsuit is filed with the arbitration court;
- When resolving various disagreements, the requirements of Russian law are taken into account.
It is allowed to include some approximate differences that may arise in the process of cooperation in the text. Additionally, ways to resolve them are indicated.
Force Majeure
Force majeure does not apply to the essential terms of the dealer agreement, but they allow you to regulate the existing relationship between the two companies in the event of any unusual situations. Therefore, the most frequently indicated data in the text:
- if any force majeure circumstances arise, the parties may be partially or fully exempted from liability for failure to fulfill their obligations;
- such circumstances usually include military conflicts in the country, natural disasters, technological disasters or other similar situations in which companies cannot cope with their basic responsibilities in the previous regime;
- if such force majeure occurs, the party to the agreement must notify his counterparty about this, for which a written notice is used.
It is allowed to include in the force majeure other significant situations in which firms may not fulfill their obligations under the document.
Validity
A dealer agreement to a supply contract is drawn up only between companies that are aimed at long-term cooperation on mutually beneficial conditions. Therefore, a contract is usually formed for a long period of time, represented by a period of 3 to 10 years. The text directly indicates its validity.
It is not allowed to terminate the agreement unilaterally until the moment when mutual obligations are fulfilled. Only after all settlements have been carried out, can a party demand the termination of cooperation, which requires the consent of the second participant. Otherwise, you have to go to court.
What mistakes are made?
When drawing up a dealer contract, some serious errors may be made by the participants. The main errors include the following:
- any participant signs this agreement without a detailed study of its contents, as well as without studying the significant conditions, which often leads to disadvantageous cooperation, litigation and early termination of the contract;
- the type of contract is incorrectly chosen, and the mediator, in case of various disagreements, cannot use the contents of the contract to defend himself in court, therefore, the wording must be competent and appropriate for both parties;
- the text does not contain detailed information on how the dealer’s remuneration for the promotion of producer goods in any region is correctly calculated, although this information is essential for any intermediary;
- The geography of future sales is not specified in the agreement, so there is often confusion when the dealer works in different cities.
Both parties must responsibly and seriously approach the process of signing a dealer agreement. It includes only conditions that are beneficial to both participants. It is advisable to involve lawyers in this process, who will be able to assess how beneficial it is for the dealer or production company to sign this agreement.
Conclusion
A dealership contract is signed between the manufacturer and a major intermediary, who then represents the manufacturer’s products on the market in different regions. In order for this document to have legal force, some mandatory details are included in it. The text contains information about the parties to the agreement, terms of delivery, prices of goods and other relevant information.
When drafting such an agreement, serious errors can be made, therefore, company executives should monitor the correctness of the text. Otherwise, cooperation will not be too profitable.