Drafting an Australian distribution agreement
Distribution agreements appoint a third party to on-sell goods in a territory. They raise particular issues under the Competition and Consumer Act 2010 (Cth), especially around resale price maintenance and exclusive dealing.
This is an 8-step workflow for drafting an exclusive or non-exclusive distribution agreement under Australian law, with a focus on Competition and Consumer Act compliance.
Before you start
- Commercial terms agreed in principle
- Appointment type (exclusive, non-exclusive, sole) decided
- Products, territory, and customer categories identified
- Consideration of any CCA notification requirements
The workflow
Appointment and exclusivity
Document the appointment type, product scope, territory, and customer segments. Address any reservation of key accounts or online channels.
Review CCA exclusive dealing
Review the proposed exclusivity provisions against the exclusive dealing prohibition in s 47 and consider whether ACCC notification is advisable.
Avoid resale price maintenance
Ensure the agreement does not impose minimum resale prices. Recommended retail prices are permissible but must be drafted carefully to avoid s 48.
Supply and ordering mechanics
Document the purchase order mechanism, pricing, payment terms, delivery, risk, and title transfer. Coordinate with the supplier's underlying supply terms.
Marketing and branding obligations
Set obligations around marketing spend, use of trade marks, approval of promotional materials, and compliance with brand guidelines.
Sales targets and termination triggers
Draft minimum purchase targets or KPIs and the consequences of underperformance — typically conversion to non-exclusive or termination rights.
Post-termination issues
Address run-off arrangements, stock buy-back, customer lists, and restraint obligations. Consider s 51ACB unfair contract term exposures.
Governing law, disputes and execution
Select the governing law, dispute resolution (including any escalation), and prepare execution blocks in compliance with the Corporations Act.
What you will have at the end
An executed distribution agreement that documents the channel relationship, complies with the CCA, and provides clear termination and run-off mechanics.
Common issues
- Minimum resale price language that risks contravening s 48
- Exclusivity drafting that triggers exclusive dealing concerns
- Unfair contract term risks for small business distributors
- Not addressing stock buy-back on termination
- Restraints that exceed what is reasonably necessary
Run this workflow on a real matter
Quillio drafts the distribution agreement and benchmarks it against the CCA provisions that most commonly affect exclusive distribution deals. See /practice-areas/commercial-lawyers or start a free trial.
This workflow is a general guide. Adapt each agreement to the commercial context and regulated-industry requirements where applicable.
Try this workflow with Quillio.
Quillio can run this workflow on a real matter, with citations to current AU authority on every step. The free trial requires no credit card.
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