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Richard - Bizlaw
Richard - Bizlaw, Attorney
Category: Business Law
Satisfied Customers: 8749
Experience:  30 years of corporate, litigation and international law
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Exclusivity contract

Resolved Question:

Would like to find some guidance about a international wholesale exclusivity contract...
Submitted: 2 years ago.
Category: Business Law
Expert:  Richard - Bizlaw replied 2 years ago.

bizlaw :

What is the question you have about the contract?

Customer:

I would like for you or anyone to read over this..

Customer:

I have a small retail online business...and I sell wholesale to different people, but one of my clients in South Korea want me to give her exclusive rights

Customer:

as the distributor of my products in South Korea.

bizlaw :

How long is it and what are the questions you have?

Customer:

The initial conversations were simple. I will not sell wholesale to anyone in South Korea for six months and she agreed to send me a $2,500 retainer fee to be returned after the the contract expired

Customer:

Her end of the deal was to make $500 purchase every month and I will honor the exclusive contract

bizlaw :

Do you do any selling in S. Korea now?

Customer:

I do a lot of business to S.Korea

Customer:

this is why she want me to only sell to her

bizlaw :

As a practical matter unless she is going to guarantee a significant increase in your business in S. Korea, I do not see anything you gain from this arrangement.

Customer:

I think the same

Customer:

She guarantee $500 worth of sales..but that is not for me like get rich and retire can of deal

Customer:


Witnesseth:

Whereas:-

A. Supplier wishes to market the Supplier’s products in Korea and desires to appoint Distributor as an exclusive distributor of the Supplier’s products within Republic of South Korea.

B. Distributor desires to be appointed by Supplier as an exclusive distributor of the Supplier’s products.

C. The Parties have engaged in preliminary, non-binding discussions regarding the terms of a possible transaction and hereby agreed to enter into an exclusive distribution agreement under the terms and conditions set out herein.

D. Pursuant to this Agreement, Jenny agreed to make a retainer deposit in the sum of USD$ 2,500 within seven (7) days after the Effective Date of this Agreement.


NOW, THEREFORE, in consideration of mutual agreement and promises set forth herein, the parties hereto agree as follows:

1. Appointment and Acceptance

1.1 Supplier appoints Distributor, and Distributor accepts to be appointed, as an exclusive distributor to market the Supplier’s product within Republic of South Korea and hereby grants to Distributor the exclusive rights to purchase, inventory, promote and resell the Supplier’s products, whether on-line or off-line.

1.2 Without prejudice to Article 1.3, Supplier shall not directly or indirectly sell or offer to sell any of the Supplier’s products in Republic of South Korea to any 3rd parties.

1.3 Supplier shall have rights to sell the Supplier’s products to any and all customers in Republic of South Korea via Etsy (neishasblue.etsy.com) , Neisha’s Blue Website (neishasblue.com), or Facebook (facebook.com/neishasblue).

1.4 Supplier shall add up Distributor as an exclusive distributor in Republic of South Korea on any and all public profiles, including without limitation to, Etsy, Supplier’s Websites and Internet community sites, for which Distributor shall be responsible for keeping continuously updated about Distributor’s contact details.


2. Commercial Terms
2.1 Pursuant to this Agreement, Distributor agrees to lodge a deposit in the sum of US$2,500 to the bank account designated by Supplier within seven (7) days after the Effective Date of this Agreement.
2.2 Distributor shall make six monthly purchases of the Supplier’s products at a price of US$500 each in such quantities and at such times as Distributor may reasonably request, as from 1 March 2012.
2.3 Distributor shall make written notice of the purchases within __7_ days prior to six monthly purchases due.
2.4 Supplier will extend a 15% flat discount of the final price.
2.5 Unless otherwise specified herein, this Agreement is based upon FOB of INCOTERMS 2010 and Distributor shall be responsible for tariffs and taxes after the Supplier’s products being delivered for shipment.
2.6 The contract will start on 1 March 2012 and will end on 1 September 2012, subjecting to an extension by mutual agreement.

3. Payment

3.1 Distributor shall pay all charges due hereunder within __ ( 7) days after the date of Supplier’s invoice.

4. Representations and Warranties

4.1 Supplier warrants that it shall not offer its products wholesale to other retailers located in Republic of South Korea.
4.2 Supplier warrants that the Supplier’s products are proven to Supplier’s satisfaction.
4.3 Distributor warrants that it shall make purchases of minim US$500 monthly.
4.4 Both Supplier and Distributor shall comply with laws and regulations of their businesses.

5. Liability/ Damages/ Penalty

5.1 If Supplier opens a new wholesale account in South Korea, it should return the entire deposit of $2,500 + $375 (15% penalty fee) to Distributor.
5.2 If Distributor fails to complete the $500 purchase by the 5th day of the months included in the contract, Supplier will retain the $2,500 deposit fee to pay for the remaining month of the contract AND 15% penalty PER MONTH for non-payment .
5.3 Neither party shall have any liability of any kind for special, indirect, incidental or consequential losses or damages in whatsoever nature under this Agreement, even if such party shall have been advised of the possibility of such potential losses and damages.


6. Force Majeure

Neither party shall be in breach of its obligations under this Agreement or incur any liability to the other party for any loss or damages of any nature whatsoever incurred of suffered by that other if it is prevented from carrying out those obligations due to Force majeure Event which is beyond the Parties’ control.

7. No Waiver

The waiver or failure of either party to exercise in any respect any right provided in this Agreement shall not be deemed a waiver of any other right or remedy to which the party may be entitled.

8. Entirety of Agreement.

The terms and conditions set forth herein constitute the entire agreement between the parties and supersede any communications or previous agreements with respect to the subject matter of this Agreement. There are no written or oral understandings directly or indirectly related to this Agreement that are not set forth herein. No change can be made to this Agreement other than in writing and signed by both parties.

9. Severability

If any term of this Agreement is held by a court of competent jurisdiction to be invalid or unenforceable, then this Agreement, including all of the remaining terms, will remain in full force and effect as if such invalid or unenforceable term had never been included.

10. Assignment

This Agreement shall be binding upon and inure to the sole benefit of the Parties hereto. Distributor may assign this Agreement to their successors with Supplier’s prior consent.

11. Headings

The headings in this agreement are for reference purpose only and shall not affect in any way the meaning or interpretation of this Agreement.


In Witness whereof, the parties have executed this Agreement as of the date first written above.


___ Neisha’s Blue Baby Boutique _________________

Name:
Address:
Phone Number::

For and on behalf of: (Company full style)

Customer:

I just posted what she sent to me yesterday

bizlaw :

If the business deal does not make sense to you, then there is no point in wasting time on the contract. If you can't make a business agreement that makes sense to you economically, it is not worth spending any time on the contract. I did go through the contract and there are a couple of things to note. Any dispute you want to resolve in the US not S. Korea. Next, limit her orders to the amount of the deposit at any one time. You do not want to be in the position where she orders $5,000 and you ship and then she does not pay and you are only holding $2,500. The most important thing at this point is that she is not offering enough in sales for you to give her an exclusive distributorship.


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This communication is not intended as legal advice. A local attorney should always be consulted for legal advice. No client/attorney relationship is intended or created by this communication.


Customer:

Ok thank you. You are just confirming what my 'gut' tells me. I will go ahead and kindly decline her offer.

Richard - Bizlaw, Attorney
Category: Business Law
Satisfied Customers: 8749
Experience: 30 years of corporate, litigation and international law
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