How to Use This Checklist
Click each checkbox to mark items as complete. Your progress is automatically saved to your browser. Use this checklist to:
✅ Three Ways to Use This Tool
1. Draft new distribution agreements: Ensure you don't miss any essential UK commercial law requirements
2. Review existing agreements: Audit your current distribution contracts against all 52 compliance points
3. Negotiate with suppliers/distributors: Verify all key terms are addressed before signing
⚠️ What Makes a Valid Distribution Agreement?
📋 Legal Status: UK distribution agreements are commercial contracts governed by common law. Written agreements are essential for clarity and enforceability. Key legislation includes Competition Act 1998, Consumer Rights Act 2015, and Late Payment of Commercial Debts Act 1998.
⚖️ Key Requirements: Clear identification of parties, defined territory, product specifications, pricing terms, payment conditions, intellectual property rights, and termination provisions.
🎯 Essential Terms: Party details, products covered, territory, exclusivity (if applicable), pricing, payment terms, delivery, warranties, IP rights, confidentiality, termination, and governing law.
💼 Common Issues: Unclear exclusivity terms, missing minimum purchase requirements, inadequate IP protection, vague termination rights, Competition Act compliance, and insufficient insurance provisions.
⚠️ Understanding Importance Levels
🔴 Critical: Must have - essential for contract validity or creates serious legal/commercial risk if omitted
🟡 Important: Should have - best practice and strong legal protection
🔵 Recommended: Nice to have - enhances clarity and prevents disputes
1. Party Details (6 items)
Supplier's Full Legal Name
The supplier company's registered legal name exactly as it appears at Companies House. Essential for contract validity and enforcement. Using trading names alone creates legal uncertainty about which entity is bound.
🔴 Critical
Supplier's Registered Address
The supplier's registered office address as recorded at Companies House. Required for service of legal notices and court proceedings. Must be kept current throughout the agreement term.
🔴 Critical
Supplier's Company Registration Number
The Companies House registration number for the supplier. Enables verification of company status, directors, and accounts. Good practice for due diligence and confirms legitimate trading entity.
🔵 Recommended
Distributor's Full Legal Name
The distributor company's registered legal name exactly as registered at Companies House. Critical for establishing clear contractual obligations and enforceability against the correct legal entity.
🔴 Critical
Distributor's Registered Address
The distributor's registered office address for official correspondence and legal notices. Essential for contract administration and any enforcement proceedings. Should match Companies House records.
🔴 Critical
Distributor's Company Registration Number
The Companies House registration number for the distributor. Enables supplier to verify distributor's legitimacy, creditworthiness, and corporate status. Important for risk assessment.
🔵 Recommended
2. Agreement Terms & Duration (5 items)
Agreement Date
The date on which the agreement is signed by both parties. Creates certainty about when contractual obligations commence and is essential for calculating time-based provisions like initial term and renewal dates.
🔴 Critical
Commencement Date
The date distribution rights become effective. May differ from agreement date if preparation time needed. Critical for calculating initial term, minimum purchase targets, and performance milestones.
🔴 Critical
Initial Term Length
The initial duration of the agreement (e.g., 1, 2, 3, or 5 years). Affects investment decisions, minimum order commitments, and planning for both parties. Too short may not justify distributor's market development investment.
🔴 Critical
Automatic Renewal Provisions
Whether the agreement automatically renews at the end of each term. If yes, specify renewal term length (typically matching initial term) and notice period required to prevent renewal (commonly 90 days).
🟡 Important
Renewal Notice Period
The advance notice required to prevent automatic renewal. Typically 60-180 days. Both parties need adequate time to make alternative arrangements if agreement will not continue. Must be clearly stated to avoid disputes.
🟡 Important
3. Products & Territory (5 items)
Products Covered
Detailed description of all products included in the distribution agreement. Include model numbers, SKUs, product categories, and any accessories. Specify whether future products are automatically included or require amendment.
🔴 Critical
Distribution Territory
The geographic area where the distributor may sell products. Can be UK-wide, specific regions (England, Scotland, Wales, NI), or international. Clear boundaries prevent territorial disputes and Competition Act issues.
🔴 Critical
Exclusivity Type
Whether rights are exclusive, non-exclusive, or sole. Exclusive: only this distributor in territory. Non-exclusive: supplier can appoint others. Sole: no other distributors but supplier can sell directly. Major impact on distributor's market investment.
🔴 Critical
Exclusivity Conditions
Requirements to maintain exclusivity status. Typically includes minimum purchase targets, marketing spend, and customer service standards. Failure to meet conditions may result in territory reduction or conversion to non-exclusive.
🟡 Important
Competition Act Compliance
Confirmation that territorial and exclusivity provisions comply with Competition Act 1998 and UK-retained EU competition law. Absolute territorial protection or resale price maintenance are prohibited. Consider seeking specialist competition law advice for complex arrangements.
🔴 Critical
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4. Pricing & Payment Terms (6 items)
Pricing Structure
How prices are determined: fixed price list, percentage discount off RRP, tiered volume pricing, or cost-plus arrangement. Must be clear and documented. Consider attaching a schedule that can be updated without amending main agreement.
🔴 Critical
Price Review Mechanism
How and when prices can be changed. Typically annual review with specified notice period (30-90 days). May link to inflation indices or raw material costs. Protects both parties from market fluctuations over long-term agreements.
🟡 Important
Payment Terms
When payment is due: Net 30, Net 60, Net 90 days from invoice, or payment in advance. Affects cash flow for both parties. Standard UK B2B terms are 30 days unless otherwise agreed. Late Payment of Commercial Debts Act 1998 applies.
🔴 Critical
Late Payment Interest
Interest rate applicable to overdue payments. UK statutory rate is Bank of England base rate + 8% under Late Payment of Commercial Debts Act 1998. Can specify different rate if reasonable. Also entitled to £40-£100 compensation per invoice.
🟡 Important
Volume Discounts
Additional discounts for larger orders. Structure as tiered pricing (e.g., 5% off orders over £10,000, 10% off £25,000+). Incentivizes larger orders and rewards distributor commitment. Must be non-discriminatory to comply with competition law.
🔵 Recommended
Currency and Payment Method
Currency for all transactions (GBP for UK agreements) and acceptable payment methods (bank transfer, direct debit, etc.). Important for international suppliers. Specify which party bears currency exchange risk if applicable.
🟡 Important
5. Minimum Requirements & Targets (4 items)
Minimum Order Quantity (MOQ)
Minimum quantity or value per order. Ensures economical production and shipping. May vary by product type. Consider distributor's storage capacity and market size when setting. Too high deters smaller distributors.
🟡 Important
Annual Purchase Target
Minimum annual purchase commitment, especially important for exclusive agreements. Failure to meet targets may result in loss of exclusivity or termination. Should be realistic based on territory market size and competition.
🟡 Important
Performance Review Process
How performance against targets is measured and reviewed. Typically quarterly or annual reviews. Include grace periods, cure rights, and consequences of underperformance. Fair process protects long-term relationship.
🔵 Recommended
Target Adjustment Mechanism
How targets may be adjusted for market conditions, new product launches, or economic changes. Flexibility protects both parties from unrealistic targets. Good faith negotiation requirement prevents disputes.
🔵 Recommended
6. Marketing & Promotion (4 items)
Marketing Obligations
Distributor's marketing commitments: "best efforts" (general), or specific requirements like minimum advertising spend, trade show attendance, sales staff training. Specific obligations easier to enforce and measure.
🟡 Important
Marketing Materials Provision
Who provides brochures, product images, digital assets, point-of-sale materials. Typically supplier provides and distributor may adapt subject to approval. Ensures consistent brand presentation across markets.
🔵 Recommended
Marketing Approval Process
Whether supplier approval needed for distributor-created marketing. Protects brand integrity and ensures regulatory compliance (especially for regulated products). Specify approval timeframes and deemed approval provisions.
🔵 Recommended
Sales Reporting Requirements
Frequency and content of sales reports from distributor. Typically monthly or quarterly. Include units sold, value, customer segments, market feedback. Essential for supplier's planning and monitoring performance.
🟡 Important
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7. Intellectual Property (4 items)
Trademark License
Grant of rights to use supplier's trademarks for marketing products. Should be non-exclusive, non-transferable, limited to agreement term and territory. Specify approved uses and required trademark notices.
🔴 Critical
Brand Guidelines Compliance
Requirement to follow supplier's brand guidelines when using trademarks. Protects brand consistency and value. Include requirement to submit samples for approval and right to audit usage.
🟡 Important
IP Ownership Confirmation
Clear statement that all intellectual property remains with supplier. Distributor acquires no ownership rights through use. Any customer data, market insights, or feedback belong to supplier unless agreed otherwise.
🔴 Critical
IP Infringement Notification
Obligation for distributor to notify supplier of any suspected IP infringement in the territory. Supplier typically handles enforcement. May include cooperation requirements and indemnification for IP claims.
🔵 Recommended
8. Quality Standards & Warranties (5 items)
Product Warranty Terms
Warranty period offered to end customers (6 months, 1 year, 2 years, etc.). Consumer Rights Act 2015 provides minimum 6-year period for defects claims regardless of stated warranty. Clarify what warranty covers and excludes.
🔴 Critical
Warranty Responsibility Allocation
Who handles warranty claims: supplier honors directly, distributor provides first-line support, or split responsibility. Clear process prevents customer service failures. Include response time requirements and replacement procedures.
🟡 Important
Returns Policy
Whether distributor can return unsold or defective stock. Options: defective items only, stock rotation allowed (with restocking fee), or no returns. Consumer Rights Act grants consumers return rights regardless of trade terms.
🟡 Important
Quality Standards
Products must meet specified quality standards, certifications, or regulatory requirements. Important for technical products, food, electrical items, toys. Supplier warrants compliance; failure is material breach.
🔴 Critical
Defective Product Procedure
Clear process for handling defective products: notification requirements, evidence needed, replacement or credit timelines. Include product recall procedures for safety issues. Both parties should cooperate fully.
🟡 Important
9. Confidentiality & Non-Compete (4 items)
Confidentiality Obligations
Mutual obligation to protect confidential information: pricing, customer lists, business plans, technical data, trade secrets. Standard clause protects both parties. Define what is confidential and permitted disclosures (legal requirements, employees on need-to-know basis).
🔴 Critical
Post-Termination Confidentiality
Confidentiality obligations that survive agreement termination. Typically 2-5 years for general confidential information, indefinitely for trade secrets. Reasonable duration and scope increase enforceability.
🟡 Important
Non-Compete During Term
Whether distributor can sell competing products during agreement term. Common in exclusive agreements. Define "competing products" clearly. Must be reasonable to be enforceable and comply with competition law.
🟡 Important
Post-Termination Non-Compete
Restrictions on selling competing products after agreement ends. Must be reasonable in duration (typically 6-12 months) and geographic scope to be enforceable. Overly broad restrictions will be struck down by courts.
🔵 Recommended
10. Termination & Post-Termination (5 items)
Notice Period for Termination
Advance notice required for ordinary termination (not for breach). Typically 60-180 days for distribution agreements. Longer periods for exclusive agreements or where significant investment made. Provides transition time for both parties.
🔴 Critical
Termination for Breach
Right to terminate immediately or with short notice for material breach. List specific breaches justifying immediate termination: non-payment, insolvency, IP infringement, reputational damage. Include cure period for remediable breaches (typically 14-30 days).
🔴 Critical
Post-Termination Stock
What happens to distributor's remaining stock after termination: return to supplier (who pays shipping), sell off period (typically 90 days), or supplier buy-back at agreed price. Prevents disputes and ensures orderly wind-down.
🟡 Important
Handover Obligations
Requirements on termination: return of marketing materials, customer data (subject to GDPR), price lists, samples, confidential information. Assists supplier with transition to new distributor or direct sales.
🔵 Recommended
Surviving Provisions
Clauses that continue after termination: confidentiality, IP ownership, indemnities, limitation of liability, dispute resolution, governing law. Clear statement prevents arguments about post-termination obligations.
🟡 Important
11. Liability & Insurance (4 items)
Liability Cap
Maximum financial liability between parties. Typically set at total contract value or annual contract value. Excludes: death/personal injury, fraud, IP infringement, confidentiality breach, which remain unlimited. Reasonable caps are enforceable under UCTA.
🔴 Critical
Exclusion of Indirect Losses
Standard exclusion of liability for indirect, consequential, or special damages: lost profits, lost business, lost data. Both parties benefit. Must be clearly drafted to be enforceable. Cannot exclude liability for fraud or death/personal injury.
🟡 Important
Product Liability Insurance
Requirement for distributor to maintain product liability insurance. Specify minimum coverage (e.g., £1,000,000 per claim). Protects against claims from defective products. Supplier may also require to be named as additional insured.
🔴 Critical
Insurance Certification
Requirement to provide proof of insurance coverage on request. Annual certificates of insurance. Supplier may require notification of policy cancellation or material changes. Ensures continuous coverage throughout agreement.
🔵 Recommended
⚡
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Next Steps
Now that you've reviewed the compliance checklist, you have three options:
✅ Use Our Ready-Made Template (Recommended)
Save hours of legal research and drafting. Our professionally-crafted distribution agreement covers all 52 compliance points with legally-sound wording. It includes territory and exclusivity provisions, pricing and payment terms, intellectual property protection, and Competition Act compliant clauses. Available in both Interview Mode (guided) and Editor Mode (direct editing) for just £10.
📝 Draft Your Own Agreement
Use this checklist as your guide, but remember: getting the legal wording correct is complex. Competition Act compliance, exclusivity terms, IP licensing, liability caps, and post-termination obligations require precise language. A single error can result in unenforceable clauses or Competition Act penalties.
⚖️ Book a Legal Consultation
For complex arrangements, exclusive territories, international distribution, or high-value contracts, consider booking a consultation with our legal professionals for personalized advice tailored to your specific circumstances.