Distribution Agreement — California

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JURISDICTION: California
LAST UPDATED: 2026-03-18
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DISTRIBUTION AGREEMENT (CALIFORNIA)

THIS DISTRIBUTION AGREEMENT (this "Agreement") is entered into as of [__/__/____] (the "Effective Date") by and between:

SUPPLIER:

DISTRIBUTOR:

TABLE OF CONTENTS

1. Recitals and Definitions
2. Appointment and Territory
3. Products and Pricing
4. Orders, Acceptance, and Delivery
5. Minimum Purchase and Performance Requirements
6. Inventory Management and Returns
7. Marketing, Promotion, and Channel Conduct
8. Antitrust Compliance — Federal and Cartwright Act
9. Branding and Intellectual Property
10. Warranties and Pass-Through
11. Product Liability and Indemnification
12. Anti-Diversion and Gray Market Provisions
13. Compliance Obligations
14. Confidentiality and CUTSA
15. Insurance
16. Limitation of Liability
17. Term and Termination
18. Effects of Termination and Wind-Down
19. California Franchise Law Considerations
20. Governing Law and Dispute Resolution
21. California-Specific Provisions
22. General Provisions
23. Signature Block
24. Schedules

1. RECITALS AND DEFINITIONS

1.1 Recitals

WHEREAS, Supplier manufactures or sources Products described in Schedule 1; and

WHEREAS, Supplier appoints Distributor to purchase and resell Products in the California Territory; and

WHEREAS, Distributor accepts such appointment;

NOW, THEREFORE, the Parties agree:

1.2 Definitions

(a) "Cartwright Act" means Cal. Bus. & Prof. Code § 16720 et seq.

(b) "CFIL" means the California Franchise Investment Law, Cal. Corp. Code § 31000 et seq.

(c) "CFRA" means the California Franchise Relations Act, Cal. Bus. & Prof. Code § 20000 et seq.

(d) "CUTSA" means the California Uniform Trade Secrets Act, Cal. Civ. Code § 3426 et seq.

(e) "Products" means the goods in Schedule 1.

(f) "Territory" means the California geographic area in Schedule 5.

2. APPOINTMENT AND TERRITORY

2.1 Appointment

☐ Exclusive distributor in the California Territory
☐ Non-Exclusive distributor
☐ Sole distributor (Supplier may sell directly)

2.2 Territory

[________________________________] (e.g., State of California; Southern California; San Francisco Bay Area)

2.3 Authorized Channels

☐ Retail ☐ E-commerce ☐ Wholesale ☐ Government ☐ Systems Integrators ☐ Other: [________________________________]

2.4 Reservation of Rights

Supplier reserves rights for direct sales outside Territory, other distributors, and national accounts per Schedule 5.

2.5 Independent Contractor

Distributor is an independent contractor. No agency relationship.

3. PRODUCTS AND PRICING

3.1 Products

Per Schedule 1. Additions/discontinuations upon [____] days' notice.

3.2 Pricing

(a) Wholesale prices per Schedule 2; (b) adjustments upon [____] days' notice; (c) no retroactive adjustment to accepted orders.

3.3 Discounts — Robinson-Patman and Cartwright Act Compliance

Volume discounts per Schedule 2. Pricing complies with Robinson-Patman Act (15 U.S.C. § 13) and is functionally available to all similarly situated distributors. The Cartwright Act (Cal. Bus. & Prof. Code § 16720) separately prohibits discriminatory pricing arrangements that restrain California trade.

3.4 Payment Terms

Net [____] days. Late payments accrue interest at the lesser of [____]% per month or ten percent (10%) per annum (the California constitutional maximum for non-exempt contracts, Cal. Const. Art. XV, § 1).

3.5 Taxes

Distributor responsible for California sales and use taxes and any applicable district taxes. California imposes sales tax at the state level plus local district taxes.

4. ORDERS, ACCEPTANCE, AND DELIVERY

4.1 Purchase Orders

Via [________________________________].

4.2 Acceptance

Binding upon written acceptance or shipment.

4.3 Delivery

☐ FCA ☐ FOB Origin ☐ FOB Destination ☐ DDP ☐ Other: [________________________________]

Lead times: [____] days. Title and risk per Incoterm.

4.4 Inspection

Inspect within [____] business days. Nonconformity notice within [____] business days. Failure constitutes acceptance under Cal. Com. Code § 2606.

4.5 Allocation

Fair allocation per Cal. Com. Code § 2615.

5. MINIMUM PURCHASE AND PERFORMANCE

5.1 Minimum Purchase

Per Schedule 3.

5.2 Metrics

☐ On-time payment ☐ Growth ☐ Forecast accuracy ☐ Returns ☐ Coverage ☐ Other: [________________________________]

5.3 Failure

(a) Exclusivity downgrade; (b) Territory reduction; (c) Termination after cure per Section 17.

6. INVENTORY AND RETURNS

6.1 Inventory

Maintain sufficient stock; report [____].

6.2 Stock Rotation

[____]% per quarter; resalable condition; RMA; [____]% restocking; Distributor freight.

6.3 DOA

Full credit within [____] days.

6.4 End-of-Life

[____] days' notice; return within [____] days for [____]% credit.

6.5 Forecasting

Rolling [____]-month forecasts.

7. MARKETING AND CHANNEL CONDUCT

7.1 Marketing

Commercially reasonable efforts; trained staff; trade shows; online presence.

7.2 Advertising Approval

Prior written approval for materials using Supplier marks.

7.3 MAP Policy

☐ MAP per Schedule 6 (advertised price only)
☐ No MAP

7.4 MDF

Per Schedule 3. Claims within [____] days.

7.5 No Bundling

No unauthorized bundling, rebranding, or alteration.

8. ANTITRUST — FEDERAL AND CARTWRIGHT ACT

8.1 Robinson-Patman Act

Pricing available to similarly situated distributors (15 U.S.C. § 13).

8.2 Sherman/Clayton Acts

Distributor sets own resale prices. No price fixing, market allocation, or boycotts.

8.3 Cartwright Act (Cal. Bus. & Prof. Code § 16720 et seq.)

(a) The Parties acknowledge that the Cartwright Act prohibits combinations in restraint of trade, including price-fixing and market allocation agreements;

(b) The Cartwright Act provides for treble damages and attorneys' fees (Cal. Bus. & Prof. Code § 16750(a));

(c) This Agreement is not intended to create any arrangement that would violate the Cartwright Act;

(d) Distributor is free to set its own resale prices without consultation or agreement with other distributors.

8.4 California Unfair Practices Act

The Parties shall comply with Cal. Bus. & Prof. Code § 17000 et seq. prohibiting below-cost sales intended to injure competitors or destroy competition.

9. BRANDING AND IP

9.1 License

Non-exclusive, non-transferable, revocable Trademark license for marketing within Territory during Term.

9.2 Guidelines

Per Schedule 7. Goodwill to Supplier.

9.3 No Reverse Engineering

9.4 Product Identification

No removal of marks or labels.

10. WARRANTIES AND PASS-THROUGH

10.1 Warranty

Products at delivery: conform to specs, free from defects, merchantable under Cal. Com. Code § 2314.

10.2 Period

[____] months from delivery or [____] months from end-customer sale, whichever first.

10.3 Pass-Through

Distributor passes through without modification.

10.4 Disclaimer

EXCEPT AS SET FORTH HEREIN, SUPPLIER MAKES NO WARRANTIES, EXPRESS OR IMPLIED, INCLUDING THE IMPLIED WARRANTY OF FITNESS FOR A PARTICULAR PURPOSE. THIS DISCLAIMER IS CONSPICUOUS PURSUANT TO CAL. COM. CODE § 2316.

10.5 Song-Beverly Consumer Warranty Act

If Products are "consumer goods" under Cal. Civ. Code § 1791(a), the Song-Beverly Consumer Warranty Act (Cal. Civ. Code § 1790 et seq.) may impose additional warranty obligations and restrictions on warranty disclaimers. Distributor shall consult legal counsel regarding applicability.

11. PRODUCT LIABILITY AND INDEMNIFICATION

11.1 California Strict Liability

California applies strict products liability. Under the doctrine established in Greenman v. Yuba Power Products, Inc., 59 Cal.2d 57 (1963), and codified in part through Cal. Civ. Code § 1714, all entities in the chain of distribution (including distributors) may be held strictly liable for defective products.

11.2 Supplier Indemnification

Supplier indemnifies Distributor for: (a) product defects; (b) IP infringement; (c) warranty breaches; (d) Supplier's negligence or misconduct.

11.3 Distributor Indemnification

Distributor indemnifies Supplier for: (a) unauthorized modifications; (b) breach of Agreement; (c) unauthorized warranties; (d) Distributor negligence; (e) noncompliance with law.

11.4 Proposition 65

If Products contain chemicals listed under California's Safe Drinking Water and Toxic Enforcement Act (Cal. Health & Safety Code § 25249.5 et seq., "Proposition 65"), Supplier shall provide appropriate Prop 65 warnings and Distributor shall ensure warnings accompany all Products sold in California.

11.5 Indemnification Procedures

Prompt notice; defense control; cooperation; no unauthorized settlement.

12. ANTI-DIVERSION

12.1 Prohibition

No diversion outside Territory; no sales to known re-exporters.

12.2 Records

Chain-of-custody documentation.

12.3 Remedies

Material breach; liquidated damages or actual damages.

13. COMPLIANCE

13.1 Export Controls

EAR, ITAR, OFAC compliance.

13.2 Anti-Corruption

FCPA and California law compliance.

13.3 Audit

Records for [____] years. Audits upon [____] days' notice, [____] times per year.

14. CONFIDENTIALITY AND CUTSA

14.1 Scope

Pricing, customer lists, business plans, technical data, marketing strategies.

14.2 Obligations

Strict confidence; limited access; Agreement purposes only.

14.3 Duration

[____] years after termination.

14.4 CUTSA Protections

Confidential Information qualifying as trade secrets is protected under CUTSA (Cal. Civ. Code § 3426 et seq.):

(a) Injunctive relief under § 3426.2;

(b) Damages for actual loss and unjust enrichment under § 3426.3;

(c) Exemplary damages up to twice actual damages for willful misappropriation under § 3426.3(c);

(d) Attorneys' fees under § 3426.4;

(e) Three-year statute of limitations under § 3426.6.

14.5 CUTSA Preemption

CUTSA preempts common-law trade secret claims. Cal. Civ. Code § 3426.7.

15. INSURANCE

15.1 Required Coverage

15.2 Additional Insured

Supplier named as additional insured.

15.3 Certificates

Within [____] days of request or renewal.

16. LIMITATION OF LIABILITY

16.1 Cap

EXCEPT FOR CONFIDENTIALITY, INDEMNIFICATION, AND WILLFUL MISCONDUCT, AGGREGATE LIABILITY LIMITED TO AMOUNTS PAID/PAYABLE IN PRIOR TWELVE (12) MONTHS.

16.2 Consequential Damages

EXCEPT FOR ANTI-DIVERSION, COMPLIANCE, AND CONFIDENTIALITY, NO INDIRECT, INCIDENTAL, SPECIAL, CONSEQUENTIAL, OR PUNITIVE DAMAGES.

16.3 Cal. Civ. Code § 1668 Limitation

Notwithstanding the foregoing, Cal. Civ. Code § 1668 provides that contracts purporting to exempt any party from responsibility for fraud, willful injury, or violation of law are void. The limitations in this Section 16 do not apply to liability arising from fraud, willful injury to person or property, or violations of law.

17. TERM AND TERMINATION

17.1 Initial Term

[____] years.

17.2 Renewal

☐ Auto-renew for [____]-year terms unless [____] days' notice
☐ Mutual agreement only

17.3 Termination for Cause

(a) Material breach uncured within [____] days (minimum sixty (60) days if CFRA applies);
(b) Insolvency or bankruptcy;
(c) Antitrust, anti-diversion, or compliance violations.

17.4 Termination for Convenience

☐ Either Party upon [____] days' notice
☐ Not permitted

18. EFFECTS OF TERMINATION

18.1 Sell-Off Period

[____] days for remaining inventory.

18.2 Inventory Repurchase

☐ Supplier repurchases at [____]% of purchase price
☐ No repurchase

18.3 Trademark Cessation

Cease use after Sell-Off Period.

18.4 Return of Confidential Information

Return or destroy within [____] days.

18.5 Outstanding Payments

Immediately payable. Accrued rebates preserved.

18.6 Survival

Sections 8, 9, 10, 11, 12, 13, 14, 15, 16, and 20 survive.

19. CALIFORNIA FRANCHISE LAW CONSIDERATIONS

19.1 Franchise Determination

The Parties represent that this Agreement is a distribution agreement and not a "franchise" as defined under the CFIL (Cal. Corp. Code § 31005) or CFRA (Cal. Bus. & Prof. Code § 20001). Specifically:

(a) Supplier does not require a "franchise fee" within the meaning of Cal. Corp. Code § 31011;

(b) Supplier does not prescribe a comprehensive "marketing plan" within the meaning of Cal. Corp. Code § 31008;

(c) Distributor operates independently and is not required to operate under a common trade name or follow standardized operational methods.

19.2 Equipment Dealers Act (CEDA)

If the Products constitute "equipment" under Cal. Bus. & Prof. Code § 22900, the California Equipment Dealers Act applies:

(a) Termination requires good cause and at least ninety (90) days' notice (§ 22902);

(b) Supplier must repurchase inventory upon termination (§ 22903);

(c) Supplier may not unreasonably withhold consent to dealer transfer (§ 22904);

(d) CEDA has extraterritorial reach — it may apply to dealers located outside California if they sell California-covered equipment (§ 22903).

19.3 California Franchise Relations Act Protections

If this arrangement is determined to be a franchise:

(a) Termination only for "good cause" — franchisee's failure to substantially comply with lawful requirements (§ 20020);

(b) At least sixty (60) days to cure before termination takes effect (§ 20020);

(c) Upon termination, franchisor must repurchase inventory, supplies, equipment, and fixtures (§ 20035);

(d) Franchisee entitled to fair and reasonable compensation.

20. GOVERNING LAW AND DISPUTE RESOLUTION

20.1 Governing Law

California law, without conflict-of-laws principles. Cal. Com. Code § 2101 et seq. applies to goods transactions.

20.2 Venue

Exclusive jurisdiction in state and federal courts in [________________________________] County, California.

20.3 Dispute Resolution

(a) Escalation. Executive negotiation for [____] days.

(b) Mediation. If unresolved, mediation in [________________________________], California.

(c) Resolution:

☐ Arbitration: Binding arbitration per Cal. Civ. Proc. Code § 1281 et seq. in [________________________________], California. Single arbitrator. Final award.

☐ Litigation: Per Section 20.2.

20.4 Prevailing Party Fees

Prevailing Party recovers fees and costs.

20.5 Jury Waiver

TO THE FULLEST EXTENT PERMITTED BY CALIFORNIA LAW, EACH PARTY WAIVES JURY TRIAL.

21. CALIFORNIA-SPECIFIC PROVISIONS

21.1 Non-Compete Prohibition

Cal. Bus. & Prof. Code § 16600 voids any contract restraining a person from engaging in a lawful profession, trade, or business. Post-termination non-compete restrictions on Distributor are unenforceable in California. This Agreement does not contain non-competition covenants.

21.2 Statute of Limitations

Written contract: four (4) years. Cal. Civ. Proc. Code § 337.

21.3 Cal. Civ. Code § 1542 Waiver

To the extent any release is contemplated, each Party waives Cal. Civ. Code § 1542.

21.4 Electronic Signatures

Valid per Cal. Civ. Code § 1633.7.

21.5 California Sales Tax

Distributor shall register with the California Department of Tax and Fee Administration (CDTFA) and collect and remit California sales and use taxes as required.

21.6 CCPA/CPRA Compliance

To the extent the Parties exchange personal information (as defined in Cal. Civ. Code § 1798.140), they shall comply with the CCPA/CPRA.

22. GENERAL PROVISIONS

22.1 Notices

(a) Personal delivery; (b) confirmed email; (c) one business day after overnight courier; (d) three business days after certified mail.

22.2 Assignment

No assignment without consent except for merger/acquisition/asset sale.

22.3 Force Majeure

No liability for earthquakes, wildfires, mudslides, severe weather, government actions, pandemics, or other events beyond reasonable control. If exceeding [____] days, non-affected Party may terminate on [____] days' notice. Cal. Com. Code § 2615.

22.4 Entire Agreement; Amendments; Severability; Counterparts

Standard provisions. Electronic signatures per Cal. Civ. Code § 1633.7.

23. SIGNATURE BLOCK

SUPPLIER:

Signature: [________________________________]
Printed Name: [________________________________]
Title: [________________________________]
Date: [__/__/____]

DISTRIBUTOR:

Signature: [________________________________]
Printed Name: [________________________________]
Title: [________________________________]
Date: [__/__/____]

24. SCHEDULES

Schedule 1 — Products

Schedule 2 — Pricing and Discounts

Schedule 3 — Minimum Purchases and MDF

Schedule 4 — Warranty Terms

Schedule 5 — Territory and Channels

Schedule 6 — MAP Policy

Schedule 7 — Trademark Guidelines

☐ Attached ☐ Available at: [________________________________]

SOURCES AND REFERENCES

• Cal. Com. Code § 2101 — UCC Article 2
• Cal. Bus. & Prof. Code § 20000 — CFRA
• Cal. Corp. Code § 31000 — CFIL
• Cal. Bus. & Prof. Code § 22900 — Equipment Dealers Act
• Cal. Bus. & Prof. Code § 16720 — Cartwright Act
• Cal. Civ. Code § 1668 — Liability Exemption Void
• 15 U.S.C. § 13 — Robinson-Patman Act