DRAFTING BATTLE-TESTED CONTRACTS APPENDIX 2 SAMPLE CONTRACT TEMPLATES (PART I)

DRAFTING BATTLE-TESTED CONTRACTS APPENDIX 2 SAMPLE CONTRACT TEMPLATES (PART I) Seller

DRAFTING BATTLE-TESTED CONTRACTS

APPENDIX 2

SAMPLE CONTRACT TEMPLATES

(PART I)

1. DISTRIBUTION AGREEMENT

THIS DISTRIBUTION AGREEMENT (“Agreement”) is made and entered into on the … day of … , by and between:

(1) Party A: a company duly incorporated and existing under the laws of the Hong Kong Special Administrative Region, China, with the following details:

Registered Office/Address: … Notification Address: …

Certificate of Incorporation No.: …

Issued on: …

Place of Issuance: …

Represented by: …

Title: …

(hereinafter referred to as the “Seller”).

AND

(2) Party B: a company duly incorporated and existing under the laws of the Socialist Republic of Vietnam, with the following details:

Enterprise Registration Certificate No.: …

Date of Issuance: …

Place of Issuance: …

Represented by: …

Title: …

(hereinafter referred to as the “Distributor”).

The Seller and the Distributor are collectively referred to as the “Parties” and individually as a “Party”.

RECITALS

(A) The Seller, a company duly incorporated and existing under the laws of the Hong Kong Special Administrative Region, China, specializing in the distribution and sale of various products, desires to engage in distribution activities with the Distributor;

(B) The Distributor, a company duly incorporated and existing under the laws of Vietnam, is authorized to import and distribute goods from abroad in accordance with Vietnamese law; and

(C) The Seller and the Distributor have mutually agreed that the Distributor shall be the exclusive distributor for the distribution and sale of the products (as defined below) within the territory (as defined below) under the terms and conditions set forth in this Agreement.

Now, therefore, the Parties agree as follows:

Article 1. Definitions and Interpretations

1.1. Definitions

In this Agreement, unless the context otherwise requires, the following terms shall have the following meanings:

(a) “Agreement” means this Distribution Agreement and any schedules, appendices, or attachments hereto;

(b) “Business Day” means any day on which commercial banks in Vietnam are generally open for business (excluding Saturdays, Sundays, or public holidays);

(c) “Effective Date” means the date of signing this Agreement, day … month … year …;

(d) “Force Majeure Event” means any and all unforeseen events beyond the reasonable control of a Party, including but not limited to natural phenomena, laws and regulations, administrative measures, orders or judgments of any court, earthquakes, floods, fires, explosions, wars, terrorism, riots, accidents, pandemics, strikes, lockouts, labor unrest, difficulty in obtaining necessary labor or essential raw materials, shortage or non-operation of transport facilities, collapse of essential plants, equipment and machinery, emergency repairs or maintenance, damage or shortage of utilities, provided that financial shortage shall not be considered a Force Majeure Event;

(e) “Products” means any and all products that Party B is permitted by Vietnamese law to import and distribute within the Territory and listed in purchase orders (as defined below) sent by the Distributor to the Seller from time to time;

(f) “Confidential Information” means any information or data stored in any form, which is proprietary and confidential to any Party, including but not limited to, the existence and terms of this Agreement, information referred to or related to the transactions contemplated by this Agreement and/or the principles, trade secrets or confidential activities, processes or inventions made or used by the Parties, organizational structure, business operations, finances, transactions, dealings or matters of the Parties or their partners, customers, and/or technology, designs; manuals, budgets, financial reports or information, sales staff lists, accounts, customer lists, marketing studies, drawings, notes and memoranda. The term “Confidential Information” shall not apply to information or data:

(i) Which is currently or, after disclosure, will be public information, except as a result of unauthorized disclosure of such information by the receiving Party; or

(ii) Provided by a third party who is not bound by a confidentiality obligation or regularly provided by the disclosing Party; or

(iii) Possessed by the receiving Party prior to the disclosure by the disclosing Party; or

(iv) Developed independently by the receiving Party without the unauthorized use of Confidential Information.

(g) “Tax” means any tax, duty, levy, local tax or government-imposed charges whether domestic or foreign and any penalties or interest related thereto that a Party may incur in connection with this Agreement;

(h) “Term” means the term of this Agreement as specified in Article 11 below; and

(i) “Territory” means the distribution area defined within the Socialist Republic of Vietnam.

1.2. Interpretation

(a) Any reference to this Agreement or its appendices, together with any legal provisions, shall include that provision and any corresponding legal provisions as amended, supplemented, or re-enacted from time to time;

(b) The headings in this Agreement are for convenience only and shall not affect its interpretation;

(c) Unless the context otherwise requires, words importing the singular shall also include the plural and vice versa; and

(d) The terms “written” and “in writing” include any mode of reproducing words in visible form. References to “Articles” or “Clauses” mean references to Articles or Clauses of this Agreement. Terms like “of this Agreement,” “in this Agreement,” or “below” or similar expressions shall be construed to refer to the entire Agreement and not to any particular Article, Clause, or section thereof.

Article 2. Appointment of the Distributor

2.1. The Seller hereby appoints, on a [non-exclusive] basis, the Distributor as the Seller’s distributor for the distribution and sale of the Products within the Territory for the Term of this Agreement.

2.2. The Distributor shall have the right to sell the Products directly or indirectly to any party or third parties within the Territory and to appoint any other distributors to distribute the Products within the Territory [with] the prior agreement or consent of the Seller.

2.3. The relationship between the Distributor and the Seller is that of an independent contractor purchasing the Products from the Seller for resale. The Distributor and its employees are not employees or legal representatives of the Seller for any purpose and have no authority to act for, bind, or commit the Seller in any way. The Distributor and the Seller agree that this Agreement does not create a franchise, joint venture, partnership, or agency relationship between the Parties.

2.4. Nothing in this Agreement shall be construed as the transfer of any rights, whether intellectual property, industrial property, or commercial property of the Seller, except the right to use the Trademarks as provided in this Agreement.

2.5. The Distributor shall perform its obligations under this Agreement in accordance with all reasonable instructions provided by the Seller from time to time.

Article 3. Product Prices

3.1. Purchase Price:

(a) The Seller shall sell the Products to the Distributor at [CIF price] specified by the Seller in the purchase orders as approved by the Distributor from time to time (“Purchase Price”).

(b) The Purchase Price does not include any taxes related to the sale of the Products to the Distributor, which the Distributor shall bear and which shall be added to each invoice issued by the Seller to the Distributor.

3.2. Retail Price:

(a) The Distributor shall sell the Products to its customers at the price specified by the Seller from time to time (“Retail Price”).

(b) The Seller, at its sole discretion, reserves the right to change the Retail Price of the Products by giving prior written notice to the Distributor, and the new Retail Price shall apply to sales made after the notice period as specified therein.

3.3. Promotional Price:

(a) The Seller may apply promotional prices for the Products by giving written notice to the Distributor from time to time. Such written notice shall be effective for a limited period as specified in the notice. Upon the expiration of the promotional period as specified in the written notice, the Retail Price shall be adjusted accordingly. Any new promotional discounts or offers shall be notified to the Distributor by a separate written notice.

(b) The Distributor may propose any promotional price programs to boost sales performance; however, the promotional price shall only apply upon written notice from the Seller.

3.4. Any notice related to pricing, whether it concerns the Purchase Price, Retail Price, or Promotional Price, once issued, shall form an integral part of this Agreement. From the effective date of the notice until the expiration of the notice period, the prices specified therein shall supersede the corresponding previous prices.

Article 4. Orders and Delivery

4.1. The Distributor shall place orders for the Products (“Orders”) and send the Orders to the Seller in the manner prescribed for notices in Article 14 below, including via email. Orders placed in accordance with this provision shall not be binding on the Parties until officially accepted by the Seller in writing (“Confirmation”).

4.2. No changes or cancellations of Orders by the Distributor shall be effective unless approved in writing by the Seller at least thirty (30) Business Days before the Products are handed over to the carrier.

4.3. The Products shall be packaged in accordance with and appropriate to customary trade practices to ensure the Products are in good condition and suitable for immediate sale upon delivery.

4.4. The Parties hereby agree that the Products shall be transported to the Distributor by a professional transport unit hired by the Seller. Unless otherwise stipulated by the Parties, all Products shall be delivered on [CIF destination port] terms. The term CIF shall have the meaning as defined in the latest version of INCOTERMS from time to time.

Article 5. Product Quality and Warranty

5.1. The quality of the Products supplied by the Seller shall conform to the specifications of the Products as specified in the purchase orders confirmed by the Seller before delivery.

5.2. The Seller shall not be liable for any damage or defects of the Products caused by the Distributor or the transport unit.

5.3. Regarding the warranty for consumers within the Territory, the Distributor shall act on behalf and conduct any and all warranty provisions as stipulated by the Seller from time to time.

Article 6. Payment

6.1. Payments for purchase orders shall be made by bank transfer within [thirty (30) Business Days] from the date the Seller issues the invoice. All payments shall be made without deduction of any Taxes and shall not be set off or counterclaimed.

6.2. Any claims related to the invoice must be notified to the Seller in writing within fifteen (15) Business Days from the date of issuance of the invoice. If not notified within this period, the Distributor is deemed to have accepted the invoice.

6.3. In the event of failure to fulfill payment obligations, the Distributor shall pay overdue interest equivalent to the twelve-month term loan interest rate announced by the Joint Stock Commercial Bank for Foreign Trade of Vietnam (Vietcombank) on the due date until full payment is made.

6.4. Furthermore, if the Distributor fails to make payments to the Seller [three] consecutive times, the Seller has the right to consider terminating this Agreement with a thirty (30) day written notice, and the Seller shall have no obligation to accept any purchase orders during that period.

Article 7. Title and Risk Transfer

7.1. Title and any risk related to the Products shall be transferred to the Distributor after the Seller completes the delivery of the Products to the carrier.

7.2. The Distributor shall be responsible for any loss or damage to the Products during transportation and handling due to the fault of the Distributor or any third party hired by the Distributor to handle the Products.

Article 8. Rights and Obligations of the Distributor

8.1. The Distributor has the right to actively and positively seek relevant and/or appropriate customers to distribute the Products in a manner permitted by law and approved by the Seller unless otherwise agreed upon by the Parties.

8.2. The Distributor has the right to carry out marketing, apply necessary and appropriate technical measures and resources to boost the sales performance of the Products within the Territory, and properly and reasonably perform related and appropriate services for customers at its own expense.

8.3. Within ten (10) Business Days after the end of each quarter, the Distributor shall provide the Seller with (a) a quarterly sales report, (b) a projected sales plan and confirmation of product purchase orders for the next two quarters, (c) other reports as reasonably requested by the Seller from time to time.

8.4. The Distributor must obtain prior written approval from the Seller before executing any promotional programs and/or advertising activities related to the Products or the Trademarks, and, in addition, must provide the Seller with detailed and comprehensive information regarding such promotional and advertising activities, including sample promotional and advertising materials and any other related information for the Seller’s approval.

8.5. At its own expense, the Distributor shall comply with all regulations and laws regarding the promotion, distribution, and sale of the Products within the Territory, and shall file for, obtain, and maintain all licenses, permits, consents, registrations, and approvals relevant to such activities. Prior to the expiration of any licenses, permits, consents, registrations, or approvals, the Distributor shall renew them and indemnify the Seller for any losses, costs, expenses, or damages incurred by the Seller due to the Distributor’s failure to comply with the obligations set forth in this Article.

8.6. The Distributor shall properly handle all administrative procedures, including all types of tax filings, and bear all costs, expenses, and Taxes arising in connection with the distribution and sale of the Products within the Territory.

8.7. The Distributor shall fully cooperate with the Seller and promptly support the Seller in the recall of any Products necessary for safety inspection or modification.

8.8. During the Term of this Agreement, the Distributor shall not directly or indirectly, without prior written consent from the Seller, sell or deliver the Products outside the Territory, allow customers to collect the Products from outside the Territory, export or assist, or become a party to the export of the Products outside the Territory:

(a) Establish any website on the internet to publicly announce the price of the Products or engage in similar acts to announce the price on any website or engage in online sales of the Products; or

(b) Sell the Products through mail-order services.

8.9. The Distributor shall not, without prior written consent from the Seller, alter or modify the Products in any way, or sell, market, or distribute, directly or indirectly, any version of any Products other than the versions designated by the Seller as the latest versions, nor shall it sell, market, or distribute, directly or indirectly, any substitute or imitation products or any other products with trademarks or designs likely to cause confusion with the Products and/or trade names.

8.10. The Distributor shall not, directly or indirectly, solicit or sell the Products to customers outside the Territory without prior written consent from the Seller for each customer outside the Territory, and shall consult the Seller on any requests or orders received from customers outside the Territory.

8.11. Any Taxes, whether within the Territory or under the jurisdiction of another country, now or in the future imposed on the transactions contemplated by this Agreement (excluding income taxes or other taxes applicable to the Seller and determined based on the Seller’s gross income or net income) shall be the responsibility of the Distributor.

8.12. The Distributor shall not sell any other products not supplied by the Seller without prior written consent from the Seller.

8.13. The Distributor shall, at its own expense and promptly, comply with all directives and instructions from the Seller concerning the Products, including but not limited to, the sale, marketing, display, and promotion of the Products.

Article 9. Rights and Obligations of the Seller

9.1. The Seller shall fulfill the purchase orders placed by the Distributor in accordance with the terms of this Agreement.

9.2. The Seller shall confirm the purchase orders from the Distributor within ten (10) Business Days from the date of receipt of each order.

9.3. The Seller shall execute the Distributor’s purchase orders as promptly as possible but shall not be liable for any delay or failure in fulfilling the orders due to Force Majeure events.

9.4. The Seller reserves the right to delay the fulfillment of the purchase orders sent by the Distributor if the Distributor fails to make any due payments to the Seller under this Agreement.

9.5. The Seller always reserves the right to discontinue any Product at any time. The Seller shall send written notice of such discontinuation to the Distributor and shall make reasonable efforts to fulfill any purchase orders placed by the Distributor before the date of such notice.

9.6. The Seller has the right to require the Distributor not to distribute, circulate, use, and/or cease the distribution, circulation, or use of any advertisements or promotional materials related to the Products that the Seller deems harmful or detrimental to the Seller’s interests.

9.7. The Seller has the right, from time to time, to modify the Products and their packaging or to add or remove any Products, and such changes shall be accepted by the Distributor without any claims or termination of the Agreement under Article 11.

9.8. At its discretion, the Seller may, at any time, after providing thirty (30) Business Days’ prior written notice to the Distributor, expand, reduce, or otherwise alter or amend the Product list.

Article 10. Intellectual Property Rights

10.1. The Seller shall have the exclusive intellectual property rights to any and all intellectual property assets related to the Products as stipulated by Vietnamese law and other relevant international treaties. Ownership rights include but are not limited to trademarks, industrial designs, utility solutions, origins of goods, and/or any other documents for which the Seller has been granted certificates of ownership or legal use by the competent authorities in Vietnam. The aforementioned intellectual property rights shall always belong to the Seller even after the Products have been delivered to the Distributor under this Agreement.

10.2. The Distributor shall not have the right to use the trade name, name, logo, or slogan of the Seller except for the purposes of promoting, advertising, and selling the Products under this Agreement. The Distributor’s right to use the intellectual property assets of the Seller related to the Products in any case must have prior approval from the Seller.

10.3. The Distributor shall promptly notify the Seller of any infringements or any actions related to the intellectual property rights of the Products that the Distributor becomes aware of. The Distributor commits to using its best efforts and goodwill to assist the Seller, at the Seller’s expense and request, in taking appropriate measures to prevent and eliminate any infringements of the intellectual property rights related to the Products.

10.4. With respect to trademarks, the Parties agree to sign a technology transfer agreement for the trademarks to specify detailed issues for the Parties to implement in practice.

Article 11. Term and Termination

11.1. The initial term of this Agreement is […] months, starting from the Effective Date, and thereafter shall automatically renew annually unless terminated in accordance with this Agreement.

11.2. In addition to the cases stipulated by law or this Agreement, this Agreement may be terminated upon the occurrence of the following events:

(a) By written agreement of the Parties;

(b) By any Party giving three (3) months’ prior written notice without any fault or breach by either Party;

(c) After thirty (30) Business Days from the date of a written notice from either Party regarding a breach of the Agreement provided that such breach is not duly remedied; and

(d) In the event that either Party is liquidated, dissolved, bankrupt, insolvent, or has its certificates, licenses revoked, or any other circumstances that result in its inability to carry on normal business operations.

11.3. Upon termination of this Agreement for any reason:

(a) The rights and obligations of the Parties shall immediately cease except for the Distributor’s obligations to pay any outstanding debts acknowledged by the Distributor or any unpaid Purchase Price. Debt confirmation notices signed by the Distributor and the Seller during the performance of this Agreement shall be considered as debt settlement records between the Parties up to the date specified in the debt confirmation notice, and the Distributor must fully pay any outstanding debts after the termination of this Agreement.

(b) At the Distributor’s expense, the Distributor shall return to the Seller or otherwise dispose of, as instructed by the Seller, all assets belonging to the Seller, all promotional materials, and all other documents and materials sent to the Distributor under this Agreement.

(c) Any unpaid debts to the Seller, including deferred credits, must be fully settled within thirty (30) Business Days from the date of termination of this Agreement; and

(d) The Distributor must handle all remaining Products according to the Seller’s instructions. In any event, the Seller will not accept the return of any Products sold to the Distributor prior to the termination of this Agreement, whether paid for or not.

(e) Without prejudice to other provisions of this Agreement, before or after the termination of this Agreement, the Seller has the right to appoint another Party and enter into a new distribution agreement with that Party to continue marketing and selling the Products within the Territory. The newly appointed Distributor has the right to take over and use the store network previously established by the Distributor, fulfill orders within the Territory, and supply the Products to consumers within the Territory.

Article 12. Breach, Compensation, and Penalty

12.1. Unless otherwise stipulated in the terms and conditions of this Agreement, if either Party commits or engages in any act of breach of commitments, warranties, or obligations set forth in this Agreement, the other Party shall have the right to take any and all actions permitted by law and this Agreement.

12.2. The breaching Party shall be liable for a penalty for breaches at the rate of 8% of the value of the contractual obligations breached.

12.3. The breaching Party shall be responsible for compensating any losses and damages suffered by the other Party.

Article 13. Force Majeure Event

13.1. Neither Party shall be held liable in any form for any damages, losses, costs, or expenses arising from or relating to any delay, interference, restriction, or non-performance of any obligations to the other Party due to a Force Majeure Event.

13.2. Without prejudice to any provisions herein, if this Agreement is suspended for more than six months due to a Force Majeure Event, either Party shall have the right to terminate this Agreement by giving the other Party thirty (30) days’ prior written notice.

Article 14. General Provisions

14.1. Confidentiality

(a) Neither Party shall, except with the prior written consent of the other Party or as required by law, disclose, display, or provide, or permit, cause, or allow to be disclosed or provided to any individual, company, partner, corporation, association, organization, or trustee (in each case whether or not having a separate legal personality) any Confidential Information and shall be responsible for maintaining complete confidentiality and security of the Confidential Information and shall not use or attempt to use or cause to be used any Confidential Information in any manner that may cause harm or loss or affect directly or indirectly any Party or the business operations of the Party.

(b) The confidentiality obligations herein shall remain in effect after the termination of this Agreement.

14.2. Notices

Any notice given under this Agreement must be in writing and delivered personally or sent by registered mail or recorded delivery or fax and shall be deemed to have been duly given when:

(a) At the time of delivery if delivered personally;

(b) Seven (07) Business Days after the date of posting if sent overseas by registered mail;

(c) If sent by fax, when sent during normal business hours, and if sent outside normal business hours, on the next business day.

Notices must be sent to the recipient’s address as stipulated in this Agreement or to such other address as the recipient has previously notified in writing to the sender.

14.3. Assignment

(a) The Distributor shall not assign or transfer this Agreement to any third party without the prior written consent of the Seller;

(b) The Seller may assign or transfer this Agreement to any third party without the prior written consent of the Distributor; and

(c) This Agreement and all covenants, terms, and conditions shall be binding upon and inure to the benefit of the respective heirs of the Distributor.

14.4. No Waiver

Failure by either Party to exercise and delay in exercising any right under this Agreement shall not be deemed a waiver of such rights or any other rights under this Agreement. The rights and remedies provided in this Agreement shall remain in full force and effect and shall not exclude any other rights and remedies provided by law. Any waiver or consent given by a Party under this Agreement must be in writing and subject to the conditions to which such Party is subject. Any waiver or consent shall be effective only at the time and for the purpose for which it is given.

14.5. Entire Agreement

(a) This Agreement supersedes and replaces any and all prior agreements, contracts, or commitments, whether oral or written or in any other form, that existed and were in effect between the Parties concerning the matters addressed herein; and

(b) Any and all appendices, addendums, presentations, and lists attached hereto are part of this Agreement and shall have the same effect as the Agreement.

14.6. Amendments

Any changes, additions, deletions, adjustments, modifications, or replacements to this Agreement or any of its terms shall not be effective unless made in writing and signed by the representatives of each Party.

14.7. Severability

If any provision of this Agreement is invalid, illegal, or unenforceable in any respect under applicable law, the Parties shall amend that provision to make it reasonable and achieve the Parties’ intention without being illegal, or that provision may be removed from this Agreement, and the remaining provisions of this Agreement shall remain in full force and effect.

14.8. Governing Law and Jurisdiction

This Agreement shall be governed by and construed in accordance with the laws of Vietnam, and the Parties irrevocably agree that the competent courts of Vietnam shall have exclusive jurisdiction over any disputes arising from or relating to this Agreement and shall be resolved primarily through negotiation between the Parties.

14.9. Language and Copies

This Agreement shall be valid and effective on the Effective Date and is made in two (02) original copies in English and two (02) original copies in Vietnamese. Each Party shall retain one (01) original copy in each language for execution. In case of any conflict, difference, or inconsistency between the English and Vietnamese versions, the English version shall prevail.

IN WITNESS WHEREOF, the duly authorized representatives of the Parties have executed this Agreement as of the date first above written. 

APPENDIX 1: Products

APPENDIX 2: Territory

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“The article’s content refers to the regulations that were applicable at the time of its creation and is intended solely for reference purposes. To obtain accurate information, it is advisable to seek the guidance of a consulting lawyer.”

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