We see too many distribution agreements that are mere spun U.S. agreements. Please have your distribution agreement and all agreements you have in Korea drafted by an experienced and proactive attorney that has on-the-ground experience in Korea. We see too many issues that could have been easily resolved by a carefully drafted agreement and a little due diligence.
Issues to consider for your Korean Distribution Agreement:
- Will your distributor in Korea be your agent? If the distributor is an agent, generally, you will, only, be paying your agent a commission and you will be directly invoicing the client. Liability and other issues to consider.
- Will your Korean distributor be your exclusive distributor? How long will the relationship last? How can the relationship be terminated? Territory? Scope?
- What occurs after termination of the relationship with the Korean distributor? Return of products, buy back inventor etc.?
- Dispute resolution mechanisms? Venue? Arbitration?
- Have you created a franchise? If so, we have some more talking to do. The requirements for franchising in Korea is much more cumbersome than a mere distribution relationship.
- Have you registered your trademarks? Korea is a first-to-file nation. If you have an agreement with a distributor - you may be protected even without registering your trademarks - however- register and avoid issues with others.
- Did you conduct a thorough due diligence on the distributor?
- Who handles warranty claims, distribution, support, marketing etc.?
- Is the party signing the agreement authorized to sign the agreement? Make sure the agreement is properly executed.
Other articles that may be of interest:
- Basic Agreements for Doing Business in Korea
- Liquidated Damages Need in Most NDAs in Korea
- Avoid the Grey Market Trap in Korea: Due Diligence, Street Smarts and Korea Law Firms
Sean Hayes may be contacted at: SeanHayes@ipglegal.com.
Sean Hayes is co-chair of the Korea Practice Team at IPG Legal. He is the only non-Korean to have worked as an attorney for the Korean court system (Constitutional Court of Korea) and one of the first non-Koreans to be a regular member of a Korean law faculty.