A few months ago, I was asked by the U.S. Department of Commerce to join a panel discussion on how to develop relationships with international distributors and representatives.

Most lawyer presentations on this subject begin by suggesting that manufacturers send their international partners one-sided contracts.  These contracts focus on legal terms such as consequential damages, non-solicitation, warranty, etc.  Many lawyers often overlook that some of these standard U.S. law terms may lead to distrust and/or misunderstanding due to differences in laws and cultural norms.  And, they may not even be enforceable.

The bottom line is that no contract, no matter how well written, will eliminate all risk.  There are certain industry realities that one has to grapple with, including that international partners often have just as much leverage as you do.  The objective should be to find a win/win.

So, when I talk to clients I think about two objectives.  The first objective is ensuring accountability.  The second objective is ensuring transparency.

Accountability (on both sides) can be achieved multiple ways, including by ensuring that the payment model is win/win, the margins work for both sides, deciding whether the distributor’s territory is exclusive, and deciding whether the distributor/sales representative is integrated with your business.

Transparency can be achieved through trip reports (note:  build the requirement into the contract) and potentially audit rights, among other things.

The three takeaways from this discussion are:

  1.  Signing them up can be easy.
  2.  Ensuring Win/Win – “Partnership” is just as important.
  3. Accountability and transparency in any contract is critical
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Photo of Jeffrey White Jeffrey White

I am a partner at Robinson+Cole who handles corporate compliance and litigation matters for both domestic and international manufacturers and distributors that make and ship products around the world. My clients have ranged from publicly traded Fortune 500 companies to privately held and/or…

I am a partner at Robinson+Cole who handles corporate compliance and litigation matters for both domestic and international manufacturers and distributors that make and ship products around the world. My clients have ranged from publicly traded Fortune 500 companies to privately held and/or family owned manufacturers. For those looking for my detailed law firm bio, click here.

I am often asked why I have focused a large part of my law practice on counseling manufacturers and distributors. As with most things in life, the answer to that question is tied back to experiences I had well before I became a lawyer. My grandfather spent over 30 years working at a steel mill (Detroit Steel Company), including several years in its maintenance department. One of my grandfather’s prime job duties was to make sure that the equipment being used was safe. In his later years, he would apply those lessons learned in every project we did together as he passed on to me his great respect and pride for the manufacturing industry.

Because of these experiences, I not only feel comfortable advising executives in a boardroom, but also can easily transition to the factory floor. My experience has involved a range of industries, including aerospace and defense, chemicals, energy, pharmaceuticals and life sciences, nutritional and dietary supplements, and retail and consumer products. While I have extensive experience in litigation (including product liability and class actions), I am extremely proactive about trying to keep my clients out of the courtroom if at all possible. Specifically, I have counseled manufacturers and distributors on issues such as product labeling and warranties, product recalls, workplace safety/OSHA, anti-trust, and vendor relations, among other things. I always look for the business-friendly solution to a problem that may face a manufacturer or distributor and I hope this blog will help advance those efforts.