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Drafting Distribution Agreements in Singapore

Drafting Distribution Agreements in Singapore

distribution or supplier agreement is a contract entered into by a vendor or manufacturer and distributor under which the former agrees to resell the goods or services provided by the latter. In Singapore, distribution agreements fall under the Company Law which allows companies to enter any transaction, the Competition Act, the Sales of Goods Act and the Supply of Goods Act. There are two types of supplier agreements one can sign in Singapore:

  • –          the exclusive agreement;
  • –          the non-exclusive contract.

While the exclusive distributor contract allows a vendor to give choose a single distributor to sell their goods or services within one or more markets, the non-exclusive agreement allows the vendor to select multiple distributors for their goods or services. The non-exclusive distributor agreement is usually employed by Singapore companies within the fast moving consumer goods (FMCG) sector.

Obligations under a distribution contract in Singapore

The Sales of Goods and the Supply of Goods laws provide for specific obligations of both the seller and the distributor to be included in a distribution agreement in Singapore. The contract must state the following:

  • –          the vendor owns the goods;
  • –          the goods are subject to no encumbrance;
  • –          the seller must ensure the goods match their description and are of good quality;
  • –          the goods correspond to the purpose for which they were prepared.

Also, if any third party is involved, usually a company transferring the goods between the supplier and the distributor, the third party will have quiet possession of the merchandise until the transfer is completed. The seller must also provide a sample of the product before forwarding it to the distributor.

How to prepare a supplier agreement in Singapore

Our Singapore lawyers can help both sellers and distributors in drafting both exclusive and non-exclusive distribution agreement. The contract must contain the following elements:

  • –          the purpose of the contract;
  • –          the territory in which the goods or services will be distributed;
  • –          if the contract is a fixed-term agreement or not;
  • –          the conditions for terminating the agreement;
  • –          intellectual property rights over the products.

The seller and the distributor may also agree on a minimum quantity of products to be sold. The supplier agreement must also be drafted in accordance with the Singapore Competition Law related to pricing requirements.

For more information about the laws applicable to distribution agreements, you can contact our law firm in Singapore.