Limited Risk Distribution Agreement Template for India

The Limited Risk Distribution Agreement is specifically designed for business arrangements in India where companies wish to establish a distribution relationship with controlled risk exposure. This document is particularly relevant when a principal company wants to maintain significant control over business operations while providing the distributor with limited risk exposure through guaranteed margins or similar arrangements. The agreement is structured to comply with Indian legal requirements, including the Indian Contract Act, 1872, Competition Act, 2002, and relevant tax laws. It typically includes detailed provisions on risk allocation, pricing mechanisms, minimum purchase requirements, and territory restrictions. This type of agreement is commonly used by multinational companies entering the Indian market or Indian companies seeking to establish a controlled distribution network with clear risk parameters.

1. Parties: Identification of the principal/supplier and the distributor, including full legal names, registration details, and addresses

2. Background: Context of the agreement, brief description of the parties' businesses, and purpose of entering into the distribution arrangement

3. Definitions: Detailed definitions of key terms used throughout the agreement, including Territory, Products, Limited Risk elements

4. Appointment and Scope: Terms of distributor appointment, exclusivity/non-exclusivity, territory definition, and scope of distribution rights

5. Limited Risk Structure: Clear articulation of the limited risk nature of the arrangement, including specific risk allocation between parties

6. Orders and Supply: Process for ordering, minimum purchase requirements, delivery terms, and acceptance procedures

7. Pricing and Payment: Pricing mechanism, payment terms, currency, and any price adjustment provisions

8. Marketing and Promotion: Obligations regarding marketing, advertising, and promotion of products

9. Intellectual Property Rights: Usage rights of trademarks, patents, and other IP, and protection obligations

10. Warranties and Indemnities: Product warranties, mutual indemnifications, and limitation of liability provisions

11. Term and Termination: Duration of agreement, renewal terms, and termination rights and procedures

12. Post-Termination: Rights and obligations after termination, including return of materials and settlement of accounts

13. Confidentiality: Protection of confidential information and trade secrets

14. Compliance: Obligations to comply with applicable laws, including anti-corruption and data protection

15. Dispute Resolution: Process for resolving disputes, including jurisdiction and governing law

16. General Provisions: Standard boilerplate clauses including force majeure, notices, and assignment