8/08/2014

Korean Distribution Agreements: So you Want to Work with a Korean Distributor

We have noted, on a number of occasions, that the drafting of a Korea-centric distribution agreement and a good deal of due diligence of the anticipated distributor/agent is necessary for avoiding the issues that will require our litigation services.  Some of the articles on Due Diligence matters may be found below:
I have been informed by one of my more frugal of clients that his company would appreciate a basic rundown of a decent distribution agreement (I know you will be drafting this on your own - don't) - so here we go.

The basic clauses we include in most of our Korean Distribution Agreements are as follows:
  • Exclusivity:  Exclusive/Non-exclusive
  • Territory & Products
  • Term of Agreement
  • Renewal/Termination
  • Pricing & Payment Terms
  • Report Requirments
  • End-User Disclosure
  • Sales Methods Allowed
  • Sales Performance
  • Legal Compliance (FCPA etc.)
  • Competition
  • Warranty/Defects
  • Technical & Sales Support
  • Marketing Materials
  • Intellectual Property - protection of trademarks, copyrights, trade secrets, patents etc.
  • Damages - Liquidated Damages
  • Breach - Material Breach
  • Dispute Resolution -Venue, Arbitration, Choice of Law
  • Standard Clauses related to integration, language etc.
This is a decent start.  Please, however, don't take this as enough to just start drafting on your own or picking a draft off the internet.  I know many lawyers that screw this up - please get the basics done at the start and you can avoid the hourly rates of my retired judge partner. 

Other articles that may be of interest
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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 first non-Korean attorney to have worked 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. He is ranked, for Korea, as one of only two non-Korean attorneys as a Top Attorney by AsiaLaw.