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Limited Risk Distribution Agreement (intra-group)

Limited Risk Distribution Agreement (intra-group)

PricewaterhouseCoopers AG

Date: November 01, 2017
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Author's Note

The Limited Risk Distribution Agreement (intra-group) is a Swiss-law governed standard agreement... Read more

The Limited Risk Distribution Agreement (intra-group) is a Swiss-law governed standard agreement for the appointment of a limited risk distributor on an intra-group basis.

A limited risk distributor is a buy-sell distributor who distributes products in its own name and for its own account for a principal company, under an agreement in which most risks are borne by the principal and only limited risks are borne by the distributor.

The distributor is appointed to distribute the products to customers in a specified territory.  The appointment may be exclusive or non-exclusive.  This template is specifically designed for the distribution of physical/ tangible products, rather than electronic products (including software).

The agreement sets out the terms of supply as between the principal and the distributor, as well as provisions relating to delivery and product warranties.   The principal bears full liability for product liability and indemnifies the distributor against any losses or claims arising out of defective products.

Under the agreement, local marketing is the responsibility of the distributor while the principal bears the cost for global/ regional marketing activities.

The template includes, as standard, an allocation of risks between the parties that is consistent with that found in a typical limited risk distribution agreement.  The distributor is remunerated in a way which allows it to achieve an operating margin similar to that of comparable independent entities, in accordance with the arm’s length principle.

Terms which are configurable to the user’s needs include:

  • Purpose and background;
  • Term and termination;
  • The products to be distributed;
  • Territory and exclusivity;
  • Warranty and delivery terms;
  • Licensing of product-related intellectual property;
  • Payment terms;
  • Sub-contracting and assignment rights;
  • Provisions relating to notices;
  • Dispute resolution, jurisdiction and arbitration; and
  • Other boiler-plate provisions (e.g. confidentiality, force majeure).


Circumstances of Use

This document is intended to be used to document the creation of a limited risk distribution arrangement between group companies, for transfer pricing purposes.

The Limited Risk Distribution Agreement (intra-group) may be used for cross-border transactions where the parties have agreed to use Swiss law.

Terms of Use

The purchase of this Product is subject to PartnerVine Terms.

You (the registered user through whose account the purchase is made) may:

  • Access the document-generation interview for 90 days from date of purchase;
  • Export and download an unlimited number of copies of the document(s) in Word or pdf format;
  • Share and use the document copies in connection with the circumstances described in this Author’s Note and only for the ordinary business purposes of the group of companies to which you belong.


Exclusions and Limitations

The Limited Risk Distribution Agreement (intra-group) assumes that the allocation of risk between the parties is aligned with that in a typical limited risk distribution relationship, and that the distributor is compensated accordingly.

Other Comments

No warranty or representation is given or made that the allocation of functions and risk and the related transfer pricing arrangements provided for in this document are appropriate in the specific circumstances of any given group of companies.  No legal or tax advice is provided and nothing in this template or the related user interview shall be deemed to constitute the provision of legal or tax advice in relation to any fact or matter. Where necessary, specialist legal and tax advice should be sought together with input from group accounting functions prior to executing this agreement.