Instructions for Contract
Use the contract (noted below) as a template to modify per the needs of your assigned role (Chris). To make your revisions more obvious to your negotiation partner, you might choose to distinguish your revisions by using a different font color. Continue revising the original contract until you and your partner are satisfied and form a complete contract with the final negotiated terms.
You and your partner will submit one final contract that has been negotiated between the two of you. Please proofread the contract, and be sure that all major terms negotiated with your partner are included, as well as missing information (names, addresses, dates, etc). Do not include red-lined changes (or different color terms from each) in the final version. The contract submitted should be one you would submit in “real life”.
You have been assigned the role of Chris, the Manager for Ultimate Liquor.
Ultimate Liquor Supply started as a small business, but has grown exponentially. As the Manager of Ultimate, you are managing the business plan to keep up with the expansion. One key to that expansion is securing a national distributorship that will expand Ultimate’s range. But this is a tall task, both in securing a distributor, negotiating a fair deal, keeping the plan going and managing all the details. In your years with Ultimate Liquors, you have had the opportunity to negotiate deals, sit in on business meetings with Executives and even review some of the legal documentation associated with the transactions. As such, you have a basic understanding of what needs to be covered in contracts. You also consider yourself apt at negotiating terms for your company. Your boss, Vera wants you to utilize that prowess to be aggressive in negotiating on key parts of the contract she felt the attorneys were a little too soft in drafting. She is primarily concerned with the following: She is nervous about having to negotiate PRICE with the distributor and wants the inclusion of a clause that is based on market price and linked to inflation as a default.
DISTRIBUTION—Vera is uncomfortable relying on the distributors “best efforts” to distribute the liquor. She wants a provision included that will provide her with information regarding distributor sales, and marketing efforts. Vera is also leery of granting Superior exclusivity to distribute Ultimate liquor nationwide.Vera also tells you to use your own judgment in raising other negotiating points with Superior.
After your meeting with Tony of Superior Distributors (this week of initial negotiations), you are confident you did well for the company. Vera was particularly interested in finding out the status of the contract with Superior, and certain critical terms. She has asked you to draft a memo detailing your negotiations thus far. Be specific on the terms that are contented between the company, where your “hard line” is on certain terms the other side wants more favorable to them, ones you easily agreed to, if some negotiations have been difficult/hampered by lack of communication, etc. Give Vera an idea of where you are, and where negotiations are headed.
Distribution Agreement
AGREEMENT made as of the day 15th of October, 2022, by and between
Ultimate Liquor Supplier, having its business address at__________________________________________ (hereinafter referred to
as “SUPPLIER”) and Superior Liquor Distributor, having its principal place of business at (hereinafter referred to as “DISTRIBUTOR”).
WHEREAS
W I T N E S S E T H
A. SUPPLIER is the producer of certain wines from the state of *STATE* as more particularly identified on the price list attached hereto, and made a part hereof, as schedule A (hereinafter referred to as the “Products”);
B. DISTRIBUTOR desires to secure from SUPPLIER, and SUPPLIER is willing to grant to DISTRIBUTOR, the exclusive right to sell and distribute SUPPLIER’S Products in the United States of America with the exception of the state of California and direct retail, airline or consumer sales and sales exported out of the country from SUPPLIER’S California winery (hereinafter referred to as the “Territory”).
NOW THEREFORE, it is mutually agreed as follows:
1. SUPPLIER hereby appoints DISTRIBUTOR as its sole and exclusive distributor for the term of this Agreement for the sale and distribution of the Products in and throughout the Territory. DISTRIBUTOR will maintain, or cause to be maintained, a sales staff for the distribution of products handled by DISTRIBUTOR, including the Products, and DISTRIBUTOR shall use its best efforts to promote the sale and distribution of SUPPLIER’S Products.
2. SUPPLIER will not ship the Products, or any other wines bearing the same or similar trademark, signature or identification anywhere on the package, to the Territory except under the order or by the direction of DISTRIBUTOR. It will refer to DISTRIBUTOR any and all orders or inquiries for the Products that it may receive for shipment to the Territory, or orders which are intended for eventual shipment to the Territory.
3. SUPPLIER will fill promptly and to the best of its ability all orders for the Products received from DISTRIBUTOR. The price to DISTRIBUTOR shall be based on delivery to DISTRIBUTOR’S warehouse and shall include a mutually negotiated delivered price to said warehouse. SUPPLIER and DISTRIBUTOR shall negotiate any price increases for the Products at least 60 days prior to the effective date of any such increase. DISTRIBUTOR shall have the right to order one month’s supply of the Products at the current price prior to any increase. Payment in U.S. dollars shall be made by DISTRIBUTOR 90 days from the date of delivery to DISTRIBUTOR’S warehouse.
4. DISTRIBUTOR and SUPPLIER shall agree on an annual basis, or more frequently if required, as to the prices at which DISTRIBUTOR shall sell the Products to its customers. SUPPLIER will furnish to DISTRIBUTOR, promptly upon request, any and all authorizations that may be required by any governmental authority in connection with the sale and distribution of the Products in the Territory, provided that SUPPLIER is responsible for obtaining or maintaining said authorizations.
5. SUPPLIER warrants, represents and agrees that all shipments of the Products sold or shipped under this Agreement shall be of first quality, suitable for beverage consumption, properly bottled and packaged in California, free from foreign matter, whether or not prejudicial to health, and will be bottled and packaged in conformity with applicable laws, regulations and requirements in effect within the Territory.
6. SUPPLIER will, upon demand, promptly execute such documents and perform such acts as may be necessary so as to prevent any products labeled in imitation or simulation of the Products from being distributed in the Territory.
7. The term of this Agreement shall be for a period of two years commencing on DATE*, and terminating on *DATE*, and shall thereafter continue in effect unless either party shall notify the other of its intention to terminate this Agreement by giving at least 12 months written notice prior to any specified termination date. Either party shall have the option to terminate this Agreement after six months of the notice period by paying to the other party a sum equal to one-half of the case volume of the previous calendar year multiplied by $200 per case. However, in the event of a breach of any of the terms and provisions of this Agreement, either party may terminate this Agreement by giving the other party 90 days written notice provided said notice shall set forth the breach being claimed as the basis for termination. If the offending party cures the breach being claimed within said 90-day period, the notice of termination shall be void and this Agreement shall continue in full and force and effect.
8. Notwithstanding the provisions of paragraph 8 hereof, SUPPLIER shall have the right to terminate this Agreement upon 60 days written notice in the event that DISTRIBUTOR shall:
a. be declared bankrupt or enter a voluntary petition for bankruptcy or in any way enter into a compromise or agreement for the benefit of its creditors;
b. fail to meet at least 90 percent of the mutually agreed upon sales performance goals set forth in Schedule B, attached hereto and made a part hereof;
c. fail to maintain in good standing all Federal and state licenses and permits necessary for the proper conduct of its business;
d. change or in any way be affected by a change in the majority ownership of its business.
9. Upon termination of this Agreement by either party, SUPPLIER shall repurchase, or cause its successor representative to purchase, as of said termination date, DISTRIBUTOR’S then existing inventory of SUPPLIER’S Products at DISTRIBUTOR’S laid-in cost, provided DISTRIBUTOR has properly stored and maintained the inventory of the Products in a saleable condition.
10. Supplier shall not be liable for failure or delay in performance of any of its obligations hereunder if such delay or failure to perform is caused by circumstances beyond its control. Distributor shall be bound to accept any delayed shipment or delivery made within a reasonable time.
11. This Agreement is the entire agreement between the parties, cannot be changed orally, and neither party has made any representations or promises to the other which are not expressed in this Agreement.
12. If any term of this Agreement is to any extent invalid, illegal, or incapable of being enforced, such term shall be excluded to the extent of such invalidity, illegality, or unenforceability; all other terms hereof shall remain in full force and effect.
13. No waiver of a breach of the terms of this Agreement shall be effective unless made in writing, and no such waiver shall be deemed a waiver of any other existing or subsequent breach. No modification of this Agreement shall be of any effect unless set forth in writing.
14. All the provisions of this Agreement are made subject to all applicable laws, regulations, rules or requirements of the Government of the United States of America or agencies of said Government, and in the performance of this Agreement, each of the parties hereto agrees to comply therewith.
15. All notices shall be sent prepaid either by mail or facsimile addressed to the respective parties at the address hereinabove set forth, unless they shall otherwise notify in writing.
16. This Agreement is a California contract and shall be governed by and construed in accordance with the laws of the state of California. Any controversy or claim arising out of or relating to this Agreement or the breach thereof shall be settled by arbitration in California in accordance with the rules of the American Arbitration Association then in effect, and judgment upon the award rendered by the arbitrator or arbitrators shall be final and binding upon the parties hereto.
17. If arbitration is required to enforce or to interpret a provision of this Agreement,
or otherwise arises with respect to the subject matter of this Agreement, the prevailing party shall be entitled, in addition to, other rights and remedies that it may have, to reimbursement for its expenses incurred with respect to that action, including court costs and reasonable attorneys’ fees at trial, on appeal;, and in connection with any petition for review.
18. This Agreement shall not be assigned or duties delegated by either party hereto.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be executed as of the day and year first above written.
SUPPLIER DISTRIBUTOR
By: By:
Title: Title:
[Closing and Signature—beginning with “IN WITNESS….”]
