Unlock eSignature Licitness for Distributor Agreement in Australia

How to eSign a document: eSignature licitness for Distributor Agreement in Australia

been most from the Australian Institute of export today I'm joined by a couple of presenters who will talk to us about distribution agreements distribution agreements and joint ventures and how they might impact on exporters when they're looking to go abroad I'm joined by John K partner with hun and Hunt lawyers and Philip associate with hunt and Hunt as well anunciation right is that's cor okay distribution agreements given that businesses often encouraged to develop a very strong Rapport understanding with the potential buyers they're looking to interact with is an agreement really essential as part of that Arrangement John what are your views um well I really iose when you say is an agreement essential you're saying it's a written agreement essential because even in the absence of a written agreement there'll still be an agreement between the parties it's possible if people have a very good relationship that they may choose to conduct their business without the benefit of a written agreement but there are a great many dangers that are inherent in taking that approach um especially from the perspective of knowing whether whether both parties are on the same page whether or not they have the same expectations about what they might achieve from their relationship Phil would you like to add something to that it's just a we see it all the time where people enter into these agreements without uh having properly documented the arrangement in advance uh and that tends to lead to uh a conflict or possible disputes down the track okay excellent so assuming then we we need the written agreement what are some of the essential things that should be included in a written agreement do you think well as in all agreements it's important that the obligations of both parties are are spelled out in sufficient detail in the in the case of a distribution agreement if I'm the Australian exporter then um the distributor is going to want to know what I'm going to be providing uh the support and assistance that I may give them to help them distribute the products uh there may be certain obligations that we need to look at uh for example in relation to package and packaging and handling who's going to have responsibilities for for those areas uh in the distribution of the goods from the exporter's point of view they they want to know what the Distributors is going to do they may wish to impose uh performance indicators on the agreements because it's going to be important for them to maximize sales in in the territory at the same time while they may be Keen to maximize sales then there's also a brand image that they may be that they may want to protect and so how the distribute distributor goes about promoting sales is also going to be very important and should the agreement have an end date do you think Phil uh a term the a fixed term is often very important in terms of um being able to give some certainty to both parties um having said that there's also um A good rule of thumb is that you would also have Provisions about termination and what happens when there's a breach of the agreement uh and when the agreement could come to an end earlier than that b turn okay good and does agreement need to be overly long how many pages roughly would you guess an agreement should be um look it's always going to depend on the subject matter of your agreement it's possible to probably keep an agreement that is that really sticks to the basics that identifies who's the exporter that identifies uh who the distributor is that identifies the product that is that's going to be distributed or the services that are going to be distributed we identify the price that is going to be charged uh for those products or Services um but you're really going to have to look at what you're Distributing are are you talking about a single product are you talking about multiple products uh in some cases the specifications are going to be very important uh it may be that you can come up with a simpler form of agreement which is say 5 to 10 pages long but then you'll have uh you might have a series of schedules or anexas to that agreement where details like uh specifications for the products any special uh shipping and handling requirements may be included there but once you get into products for example that have where intellectual property is an important component of what is there it's going to be very important to ensure that the intellectual property protection Provisions in the agreement are sufficiently strong and rigorous to protect the uh the holder of those intellectual property rights good so assuming I've come across this distributor and he says look I've got a standard format of agreement here just sign the bottom of this Philip would you suggest that that person get some legal advice of his own just to check it out well especially as a lawyer it's hard not to advise someone to to go and get their legal uh a legal opinion at least on on the agreement even if the agreement may not be able to be negotiated uh it is very important as John has mentioned earlier it's important to clarify expectations uh and to determine how the agreement will operate in practice as well as uh what's in the party's Minds okay good and what are some of the common traps that you've seen exporters fall into with distribution agreements uh some of the common traps include uh that that there's um the Agreements are in two languages um so for instance we uh work with clients that involve distribution networks in China uh and it should be clarified in the agreement which one prevails in this case we would say the English one to Prevail uh John probably also has other common other examples of common traps which people made often when people are entering into uh entering enter entering into any agreement whether it's a distribution or or or otherwise um they can get quite caught up with the enthusiasm of the of the moment they're very keen and the other side is very keen and so when it comes to agreeing on some of the uh some of the the sticky bits they tend to they can tend to sort of Coast over them on the basis that oh if that becomes an issue we'll deal with it at the time but whenever there anything is left uh on a basis that is to to be agreed in the future when that particular situation arises that is a time when people can really become quite unstuck because as Philip has has said just a moment ago you don't have a meeting of expectations and that is a a recipe for disappointment and should a dispute arise between the exporter and distributor what is the best option as a method of approach for the export to take in that circumstance um it's important for the exporter to have a dispute resolution mechanism in the agreement that is going to facilitate the resolution of the dispute in a way uh that they're going to be able to rely on uh in many situations people might be tempted to say fine here I am in Sydney I'll um new we'll have the agreement governed by New South Wales law will agree to the uh nonexclusive jurisdiction of the courts in New South Wales and everything we find the difficulty is that if a dispute arises um with a counterparty they might be in China they might be in the states they might be somewhere in Europe um the exporter here may succeed in getting judgment against their overseas distributor but when it comes time to enforcing that judgment they may find that they have difficulty in doing that so in each jurisdiction it's worthwhile uh for for the exporter to take the time to understand what alternative methods of dispute resolution are available they may choose to rely on the courts but it may be easier to to find out what um arbitral uh schemes exist within the jurisdiction and uh to nominate that as the dispute resolution mechanism in the event that a dispute arises we would still recommend that Australian law uh would govern the contract but the dispute will be then decided in the country and that uh should make it easier for the exporter to be able to enforce uh the the award that they excellent well John and Philip thank you very much we can see from that little interview that there is quite a lot to be considered just in a reasonably simple distribution agreement so the message is I think to have a chat to your local loyer first to make sure you avoid those pitfalls and problems further down the track hey