A Letter of Intent for Distributorship is commonly used in the United States when companies are planning to enter into a distribution relationship but need to formalize their preliminary understanding before committing to a full distribution agreement. This document serves multiple purposes: it demonstrates serious intent to proceed, outlines key commercial terms, establishes a framework for negotiations, and provides certain binding commitments (typically around confidentiality and exclusive negotiations). While governed by US federal and state laws, it's designed to be primarily non-binding on the main commercial terms, allowing flexibility in final negotiations while providing structure to the relationship development process. The document is particularly useful when parties need to conduct due diligence, secure internal approvals, or negotiate complex terms before finalizing a full distribution agreement.
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1. Parties: Identification of the proposed manufacturer/supplier and distributor, including full legal names and addresses
2. Background: Context of the proposed distribution relationship and purpose of the Letter of Intent
3. Definitions: Key terms used throughout the document
4. Proposed Distribution Rights: Overview of the distribution rights to be granted, including territory and product lines
5. Non-Binding Nature: Clear statement that the LOI is generally non-binding except for specific provisions
6. Key Commercial Terms: Outline of essential business terms including pricing structure, minimum purchase requirements, and payment terms
7. Timeline: Proposed timeline for negotiating and executing the final distribution agreement
8. Binding Provisions: Specifically identified provisions that are intended to be legally binding
9. Confidentiality: Binding provisions regarding the protection of confidential information exchanged during negotiations
10. Exclusivity of Negotiations: If applicable, binding commitment not to negotiate with other parties during a specified period
11. Termination: Conditions under which the LOI can be terminated and the effect of termination
12. Governing Law: Specification of the governing law and jurisdiction
1. Due Diligence: Framework for the due diligence process, used when significant investigation is needed before final agreement
2. Cost Allocation: Distribution of costs during the negotiation period, included when significant expenses are anticipated
3. Marketing Commitments: Preliminary marketing and promotion obligations, included when marketing is a crucial aspect of the relationship
4. Quality Control: Preliminary quality standards and control measures, included for products requiring specific quality assurance
5. Training Provisions: Outline of proposed training requirements, included when product complexity requires significant training
6. Milestone Schedule: Specific milestones and deadlines, included when a phased approach to final agreement is desired
7. Break-up Fee: Provisions for compensation if negotiations fail, included in high-value or complex negotiations
1. Schedule A - Products: Preliminary list of products to be distributed
2. Schedule B - Territory: Detailed description of the proposed distribution territory
3. Schedule C - Initial Business Plan: High-level outline of proposed business objectives and strategies
4. Schedule D - Proposed Commercial Terms: Detailed breakdown of proposed pricing, margins, and commercial conditions
5. Schedule E - Timeline: Detailed timeline for negotiation, due diligence, and execution of final agreement
Relevant legal definitions
Agreement
Binding Provisions
Confidential Information
Distribution Rights
Distribution Territory
Due Diligence Period
Effective Date
Exclusivity Period
Final Agreement
Intellectual Property Rights
Letter of Intent
Minimum Purchase Requirements
Negotiation Period
Non-Binding Provisions
Parties
Products
Proposed Commercial Terms
Supplier
Distributor
Term
Territory
Trade Marks
Trade Names
Working Day
Binding Provisions
Confidential Information
Distribution Rights
Distribution Territory
Due Diligence Period
Effective Date
Exclusivity Period
Final Agreement
Intellectual Property Rights
Letter of Intent
Minimum Purchase Requirements
Negotiation Period
Non-Binding Provisions
Parties
Products
Proposed Commercial Terms
Supplier
Distributor
Term
Territory
Trade Marks
Trade Names
Working Day
Clauses
Interpretation
Non-Binding Nature
Proposed Distribution Rights
Territory
Product Scope
Commercial Terms
Pricing
Minimum Purchase Requirements
Performance Targets
Term and Termination
Confidentiality
Exclusivity of Negotiations
Due Diligence
Intellectual Property
Binding Provisions
Non-Binding Provisions
Costs and Expenses
Governing Law
Jurisdiction
Good Faith Negotiations
Timeline
Representations and Warranties
No Agency
Notices
Assignment
Entire Agreement
Severability
Non-Binding Nature
Proposed Distribution Rights
Territory
Product Scope
Commercial Terms
Pricing
Minimum Purchase Requirements
Performance Targets
Term and Termination
Confidentiality
Exclusivity of Negotiations
Due Diligence
Intellectual Property
Binding Provisions
Non-Binding Provisions
Costs and Expenses
Governing Law
Jurisdiction
Good Faith Negotiations
Timeline
Representations and Warranties
No Agency
Notices
Assignment
Entire Agreement
Severability
Relevant Industries
Consumer Goods
Electronics
Automotive
Medical Devices
Industrial Equipment
Food and Beverage
Pharmaceuticals
Cosmetics
Sporting Goods
Home Appliances
Construction Materials
Agricultural Products
Technology
Chemicals
Telecommunications
Relevant Teams
Legal
Commercial
Sales
Business Development
Operations
Supply Chain
Procurement
Contract Administration
Corporate Development
International Trade
Distribution
Channel Management
Relevant Roles
Chief Executive Officer
Commercial Director
Sales Director
Business Development Manager
Distribution Manager
Channel Manager
Legal Counsel
Contract Manager
Chief Operating Officer
Supply Chain Manager
Regional Sales Manager
General Counsel
Procurement Manager
Commercial Operations Manager
Business Unit Director
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