Distribution Agreement - Texas

comments before finalizing.
8. Have this document reviewed by a Texas-licensed attorney.

JURISDICTION: Texas
LAST UPDATED: 2026-03-18
-->

DISTRIBUTION AGREEMENT

(STATE OF TEXAS)

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

SUPPLIER:

DISTRIBUTOR:

(Supplier and Distributor are each a "Party" and collectively the "Parties.")

TABLE OF CONTENTS

1. Appointment and Territory
2. Products
3. Pricing, Discounts, and Payment Terms
4. Orders, Acceptance, and Delivery
5. Minimum Purchase and Performance Requirements
6. Inventory Management and Returns
7. Marketing, Advertising, and Channel Conduct
8. Intellectual Property and Branding
9. Compliance and Regulatory
10. Warranties
11. Indemnification
12. Limitation of Liability
13. Term and Renewal
14. Termination
15. Effects of Termination
16. Confidentiality
17. Insurance
18. Non-Competition and Non-Solicitation
19. Dispute Resolution and Governing Law
20. Miscellaneous Provisions
21. Execution and Signatures
22. Schedules

1. APPOINTMENT AND TERRITORY

1.1 Appointment. Supplier appoints Distributor, and Distributor accepts appointment, as a:

☐ Non-Exclusive Distributor
☐ Exclusive Distributor
☐ Sole Distributor (Supplier may sell directly but will not appoint others)

for the Products listed in Schedule 1, within the Territory defined in Section 1.2.

1.2 Territory. The territory shall be: [________________________________] (the "Territory").

1.3 Authorized Channels.

☐ Retail ☐ E-commerce/Online ☐ Wholesale ☐ Government (including Texas state/local) ☐ Oil & Gas/Energy Sector ☐ Other: [________________________________]

1.4 Restrictions. Distributor shall not sell or distribute Products:

(a) Outside the Territory without prior written consent;
(b) Through unauthorized channels;
(c) To customers on Supplier's restricted list; or
(d) To sanctioned parties.

1.5 Reservation of Rights. Supplier reserves:

☐ Right to sell directly within the Territory
☐ Right to appoint additional distributors
☐ House accounts (Schedule 5)
☐ Right to modify the Territory upon [____] days' notice

2. PRODUCTS

2.1 Covered Products. Products are listed in Schedule 1.

2.2 Product Changes. Supplier may add or discontinue products upon [____] days' notice. Modifications shall not materially diminish quality.

2.3 New Products.

☐ Right of first refusal for new products
☐ No automatic right
☐ Other: [________________________________]

3. PRICING, DISCOUNTS, AND PAYMENT TERMS

3.1 Pricing. Prices set forth in Schedule 2.

3.2 Price Changes. Upon [____] days' written notice. Not retroactive to accepted orders.

3.3 Distributor Margin. [____]% of suggested retail price (per Schedule 2).

3.4 Minimum Advertised Price (MAP).

☐ MAP policy applies (Schedule 2A). Distributor shall not advertise below MAP, to the extent lawful.

☐ No MAP policy.

3.5 Payment Terms.

☐ Net [____] days
☐ [____]% discount if paid within [____] days; net [____] days
☐ Prepayment for initial orders
☐ Letter of credit
☐ Other: [________________________________]

3.6 Late Payment Interest. Late payments accrue interest at [____]% per annum, or the maximum rate permitted by Texas law, whichever is less.

3.7 Texas Sales Tax. Distributor is responsible for collecting and remitting Texas state sales tax (currently 6.25%) and applicable local sales tax (up to 2%) on sales to end customers, unless the sale is exempt. Distributor shall maintain a valid Texas sales tax permit issued by the Texas Comptroller.

3.8 Robinson-Patman Compliance. Supplier represents that pricing does not violate the Robinson-Patman Act (15 U.S.C. § 13).

4. ORDERS, ACCEPTANCE, AND DELIVERY

4.1 Purchase Orders. Submitted via [________________________________]. Each order specifies SKU, quantity, delivery date, and address.

4.2 Acceptance. Supplier accepts or rejects within [____] business days. Orders not rejected are deemed accepted. Supplier may reject for credit concerns (Tex. Bus. & Com. Code § 2.702), insufficient inventory, or non-compliance with minimums.

4.3 Delivery Terms.

☐ FOB Shipping Point — risk passes upon delivery to carrier
☐ FOB Destination — risk passes upon delivery at destination
☐ Incoterms [____]

4.4 Lead Times. [____] business days from order acceptance.

4.5 Inspection and Acceptance. Distributor inspects within [____] business days of receipt. Non-conformity notice must be given within that period. Failure to notify constitutes acceptance per Tex. Bus. & Com. Code § 2.606.

4.6 Title. Title passes upon [________________________________].

5. MINIMUM PURCHASE AND PERFORMANCE REQUIREMENTS

5.1 Minimum Purchase.

5.2 Performance Metrics.

5.3 Consequences of Non-Performance. Written notice, [____] days to submit remediation plan, and if deficiency continues for [____] consecutive quarters, Supplier may convert exclusivity, reduce territory, or terminate.

6. INVENTORY MANAGEMENT AND RETURNS

6.1 Inventory Levels. Sufficient to meet anticipated demand (per Schedule 6 if applicable).

6.2 Stock Rotation. Up to [____]% of prior quarter's purchases, subject to RMA, restocking fee of [____]%, and Distributor-borne return shipping.

6.3 Defective Products. Returned within [____] days at Supplier's expense.

6.4 Discontinued Products. [____] days to return at original purchase price less restocking fee.

6.5 Reporting. [☐ Weekly ☐ Monthly ☐ Quarterly] inventory reports to Supplier.

7. MARKETING, ADVERTISING, AND CHANNEL CONDUCT

7.1 Marketing Efforts. Distributor shall use commercially reasonable efforts to promote and market Products in the Territory, consistent with Supplier's brand guidelines.

7.2 MDF.

☐ $[________________________________] per [☐ quarter ☐ year] for approved marketing (Schedule 3).
☐ No MDF.

7.3 Co-Op Advertising.

☐ [____]% reimbursement of approved expenditures up to $[________________________________].
☐ No co-op.

7.4 Prohibited Activities. Distributor shall not:

(a) Make unauthorized product claims;
(b) Bundle with competing products without consent;
(c) Engage in conduct violating the Texas Deceptive Trade Practices Act (Tex. Bus. & Com. Code § 17.41 et seq.);
(d) Rebrand or repackage without consent; or
(e) Sell below MAP (if applicable).

8. INTELLECTUAL PROPERTY AND BRANDING

8.1 License. Supplier grants a non-exclusive, non-transferable, revocable license to use Supplier's marks solely for marketing and distributing the Products in the Territory during the Term.

8.2 Restrictions. No modification, removal of marks, reverse engineering, registration of confusingly similar marks, or post-termination use.

8.3 Ownership. All IP remains Supplier's sole property.

9. COMPLIANCE AND REGULATORY

9.1 General Compliance. Each Party shall comply with all applicable laws, including:

(a) Antitrust: Sherman Act (15 U.S.C. § 1); Robinson-Patman Act (15 U.S.C. § 13); Texas Free Enterprise and Antitrust Act (Tex. Bus. & Com. Code § 15.01 et seq.);
(b) Export controls and sanctions;
(c) Anti-corruption (FCPA, 15 U.S.C. § 78dd-1 et seq.);
(d) Data privacy (Texas Identity Theft Enforcement and Protection Act, Tex. Bus. & Com. Code § 521.001 et seq.; Texas Data Privacy and Security Act, if applicable);
(e) Product safety and labeling;
(f) Texas Deceptive Trade Practices Act (Tex. Bus. & Com. Code § 17.41 et seq.); and
(g) Texas sales tax obligations (Tex. Tax Code § 151.001 et seq.).

9.2 Export Controls. No export to sanctioned countries, entities, or individuals.

9.3 Anti-Corruption. No bribes, facilitation payments, or corrupt payments.

9.4 Records and Audit. Distributor maintains accurate records. Supplier may audit upon [____] days' notice, [____] time(s) per year.

10. WARRANTIES

10.1 Product Warranty. Products shall conform to specifications and be free from material defects for [____] months from delivery (Schedule 4).

10.2 Pass-Through. Distributor passes through Supplier's warranty without modification.

10.3 Disclaimer. EXCEPT FOR EXPRESS WARRANTIES IN SECTION 10.1, SUPPLIER DISCLAIMS ALL WARRANTIES, EXPRESS OR IMPLIED, INCLUDING WARRANTIES OF MERCHANTABILITY (TEX. BUS. & COM. CODE § 2.314) AND FITNESS FOR PARTICULAR PURPOSE (§ 2.315), TO THE EXTENT PERMITTED BY § 2.316.

10.4 First-Line Support.

☐ Distributor provides first-line support.
☐ Supplier handles directly.

11. INDEMNIFICATION

11.1 Supplier Indemnifies. Against Claims from: product defects at delivery, IP infringement, Supplier's breach, and Supplier's negligence or willful misconduct.

11.2 Distributor Indemnifies. Against Claims from: unauthorized claims about Products, misuse of IP, sales outside Territory, Distributor's breach, and Distributor's negligence or willful misconduct.

11.3 DTPA Indemnification. Distributor shall indemnify Supplier against any Claims arising from Distributor's deceptive trade practices in violation of Tex. Bus. & Com. Code § 17.41 et seq. Supplier shall indemnify Distributor against any Claims arising from Supplier's deceptive trade practices.

11.4 Procedure. Prompt notice, control of defense, and cooperation.

12. LIMITATION OF LIABILITY

12.1 Cap. EXCEPT FOR INDEMNIFICATION, IP INFRINGEMENT, CONFIDENTIALITY BREACHES, DTPA CLAIMS, AND WILLFUL MISCONDUCT, TOTAL LIABILITY SHALL NOT EXCEED FEES PAID/PAYABLE IN THE PRIOR [____] MONTHS.

12.2 Consequential Damages. SAME CARVE-OUTS; NO LIABILITY FOR INDIRECT, INCIDENTAL, SPECIAL, CONSEQUENTIAL, OR PUNITIVE DAMAGES.

13. TERM AND RENEWAL

13.1 Initial Term. [____] years from the Effective Date.

13.2 Renewal.

☐ Automatic renewal for [____]-year periods unless [____] days' notice of non-renewal.
☐ Renewal by mutual written agreement only.

14. TERMINATION

14.1 For Cause. Either Party may terminate upon:

(a) Material breach not cured within [____] days of notice;
(b) Insolvency, bankruptcy, or assignment for benefit of creditors;
(c) Export control, sanctions, or anti-corruption violations; or
(d) Failure to meet minimums for [____] consecutive quarters (after cure opportunity).

14.2 For Convenience.

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

14.3 Reasonable Notification. Per Tex. Bus. & Com. Code § 2.309(c), an agreement for indefinite duration may be terminated upon reasonable notification, and an agreement dispensing with notification is invalid if unconscionable.

14.4 Texas Dealer Protection. If this distribution involves products subject to Texas dealer protection statutes, the following may apply:

☐ Motor Vehicles: Tex. Occ. Code § 2301.001 et seq. (cannot terminate without good cause; specific procedures required)
☐ Farm Equipment: Tex. Bus. & Com. Code Chapter 57 (termination requires good cause and notice)
☐ Heavy Equipment: Tex. Bus. & Com. Code Chapter 56 (termination restrictions and repurchase obligations)
☐ None of the above — no industry-specific dealer protection statute applies.

15. EFFECTS OF TERMINATION

15.1 Cessation. Cease holding out as authorized distributor (except during sell-off).

15.2 Sell-Off.

☐ [____] days to sell existing inventory.
☐ No sell-off; return or Supplier repurchase.

15.3 Dealer Repurchase (if applicable). If a Texas dealer protection statute applies, Supplier shall repurchase unsold inventory, parts, and equipment as required by the applicable statute.

15.4 Return of Materials. Return Confidential Information, cease IP use, remove references, return marketing materials within [____] days.

15.5 Outstanding Accounts. All invoices due immediately. Pay outstanding credits/rebates.

15.6 Survival. Accrued rights, indemnification, confidentiality, and non-competition (if applicable) survive.

16. CONFIDENTIALITY

16.1 Definition. Pricing, customer lists, business strategies, product plans, financial data, and designated confidential information.

16.2 Obligations. Protect, do not disclose, use only for Agreement purposes.

16.3 Duration. Survives termination for [____] years.

16.4 Exceptions. Public information, independently developed, lawfully received, legally required disclosure.

17. INSURANCE

17.1 Required Coverage.

17.2 Evidence. Certificates of insurance upon request; Supplier named as additional insured.

18. NON-COMPETITION AND NON-SOLICITATION

☐ Applies. ☐ Does not apply.

18.1 Non-Competition. During the Term and for [____] months after termination, Distributor shall not distribute competing products within the Territory.

18.2 Non-Solicitation. During the Term and for [____] months after termination, neither Party shall solicit the other's employees.

19. DISPUTE RESOLUTION AND GOVERNING LAW

19.1 Governing Law. This Agreement is governed by the laws of the State of Texas, including Texas's enactment of UCC Article 2 (Tex. Bus. & Com. Code Chapter 2), without giving effect to choice-of-law principles.

19.2 Escalation. Disputes escalated to senior management for [____] days.

19.3 Resolution.

☐ Litigation: Exclusive jurisdiction in the courts of [________________________________] County, Texas, or the U.S. District Court for the [☐ Northern ☐ Southern ☐ Eastern ☐ Western] District of Texas.

☐ Arbitration: Binding arbitration under [☐ JAMS ☐ AAA ☐ Other: ____] rules in [________________________________], Texas, pursuant to the Texas General Arbitration Act (Tex. Civ. Prac. & Rem. Code Chapter 171) or the Federal Arbitration Act (9 U.S.C. § 1 et seq.).

19.4 Jury Waiver. TO THE FULLEST EXTENT PERMITTED BY TEXAS LAW, EACH PARTY WAIVES ANY RIGHT TO TRIAL BY JURY.

Supplier Initials: [____] Distributor Initials: [____]

20. MISCELLANEOUS PROVISIONS

20.1 Entire Agreement. Supersedes all prior agreements. This Agreement controls over conflicting purchase order terms.

20.2 Amendments. Written instrument signed by both Parties.

20.3 Severability. Invalid provisions reformed to minimum extent necessary.

20.4 Waiver. Failure to enforce does not waive future enforcement.

20.5 Assignment. No assignment without consent, except to successors.

20.6 Notices. Written, deemed delivered upon personal delivery, overnight courier, three (3) business days after certified mail, or confirmed email.

20.7 Force Majeure. Neither Party liable for failure due to events beyond control (including natural disasters, war, government action, pandemic, supply disruption, extreme weather events, and energy grid disruptions).

20.8 Independent Contractors. No agency, partnership, or joint venture.

20.9 Order of Precedence. (1) This Agreement; (2) Schedules; (3) Purchase orders.

20.10 Texas Franchise Tax. Each Party is responsible for its own Texas franchise tax obligations under Tex. Tax Code Chapter 171. Neither Party shall be liable for the other Party's franchise tax.

20.11 Electronic Signatures. Valid per Tex. Bus. & Com. Code § 322.001 et seq. (Uniform Electronic Transactions Act) and 15 U.S.C. § 7001 et seq. (E-SIGN Act).

21. EXECUTION AND SIGNATURES

SUPPLIER:

Signature: [________________________________]

Printed Name: [________________________________]

Title: [________________________________]

Date: [__/__/____]

DISTRIBUTOR:

Signature: [________________________________]

Printed Name: [________________________________]

Title: [________________________________]

Date: [__/__/____]

22. SCHEDULES

Schedule 1: Products

Schedule 2: Prices and Discounts

Schedule 3: Marketing Development Fund (MDF) / Co-Op Terms

[________________________________]

Schedule 4: Warranty Terms and IP Indemnity Summary

[________________________________]

Schedule 5: Territory / Channel Map / House Accounts

[________________________________]

Schedule 6: Inventory Requirements

[________________________________]

SOURCES AND REFERENCES

• Tex. Bus. & Com. Code Chapter 2 — UCC Article 2 (Sales) (§§ 2.102, 2.201, 2.302, 2.309, 2.314, 2.315, 2.316, 2.606, 2.702, 2.703, 2.711)
• Tex. Bus. & Com. Code § 15.01 et seq. — Texas Free Enterprise and Antitrust Act
• Tex. Bus. & Com. Code § 15.50 et seq. — Covenants not to compete
• Tex. Bus. & Com. Code § 17.41 et seq. — Deceptive Trade Practices Act (DTPA)
• Tex. Bus. & Com. Code § 35.01 et seq. — Business Opportunity Act
• Tex. Bus. & Com. Code Chapter 56 — Heavy equipment dealer protection
• Tex. Bus. & Com. Code Chapter 57 — Farm equipment dealer protection
• Tex. Bus. & Com. Code § 322.001 et seq. — Uniform Electronic Transactions Act
• Tex. Bus. & Com. Code § 521.001 et seq. — Identity Theft Enforcement and Protection Act
• Tex. Occ. Code § 2301.001 et seq. — Motor vehicle dealer protection
• Tex. Fin. Code § 302.001 et seq. — Usury
• Tex. Fin. Code § 303.009 — Weekly interest rate ceiling
• Tex. Fin. Code § 305.001 — Usury penalties
• Tex. Tax Code § 151.001 et seq. — Sales and use tax
• Tex. Tax Code Chapter 171 — Franchise tax
• Tex. Lab. Code § 401.001 et seq. — Workers' compensation
• Tex. Civ. Prac. & Rem. Code Chapter 171 — General Arbitration Act
• Texas Constitution Art. I, § 15; Art. V, § 10 — Jury trial rights
• 15 U.S.C. § 1 — Sherman Antitrust Act
• 15 U.S.C. § 13 — Robinson-Patman Act
• 15 U.S.C. § 78dd-1 et seq. — Foreign Corrupt Practices Act
• 9 U.S.C. § 1 et seq. — Federal Arbitration Act
• 15 U.S.C. § 7001 et seq. — E-SIGN Act