Distribution Agreements For Importers In New Zealand

Priya imports premium kitchen appliances and has found a distributor who says they can get her products into stores across New Zealand. They want exclusive rights for three years, but the draft agreement is light on sales targets, product recalls and who pays if a customer makes a warranty claim.

That kind of deal can be exciting. It can also tie up your market if the terms aren't clear from day one.

A good distribution agreement in NZ doesn't just say who sells the products. It sets the commercial rules for territory, payment, minimum orders, warranties, Consumer Guarantees Act exposure, brand use and how the arrangement can end if things don't go to plan.

What Is A Distribution Agreement In NZ?

A distribution agreement in NZ is a contract that lets one business buy products from another business and resell them in an agreed market or channel.

For importers and overseas suppliers, it usually sets out who can sell the products in New Zealand, what sales targets apply, how orders are placed, who handles customer issues and what happens if the relationship ends.

It's different from an agency agreement. A distributor usually buys and resells the goods in its own name, often setting its own resale prices within the limits of competition law and any product supply agreement. An agent usually introduces customers or negotiates on behalf of the supplier.

Your agreement should make that distinction clear because it affects:

• Payment risk: Does the distributor pay you, or do end customers pay you?
• Customer responsibility: Who deals with returns, warranty claims and product support?
• Brand control: Who can use your trade marks, images and marketing content?
• Regulatory responsibility: Who checks New Zealand product safety, labelling and consumer law obligations?

If your supplier distribution contract or import/export agreement involves an overseas manufacturer, you should also think carefully about governing law, language, currency, logistics and recall responsibilities. A short template can miss these practical details, so it's worth having the document tailored like a supplier agreement to how your supply chain actually works.

Should You Offer Exclusive Distribution Rights?

It depends on how much confidence you have in the distributor, what they're promising in return and how hard it would be to change course later.

An exclusive distribution agreement in NZ gives one distributor the right to sell within a defined territory or channel. That can be useful if the distributor is investing in sales staff, warehousing, marketing or retailer relationships. The trade-off is that you may be locked out of selling through anyone else in that space.

Exclusivity works best when it's linked to clear performance obligations. If the distributor wants exclusive rights across all of New Zealand, you might ask for:

• minimum annual purchase volumes
• quarterly sales targets
• minimum marketing spend
• agreed retail or wholesale agreement channel coverage
• regular sales reports
• a right to remove exclusivity if targets are missed

Say Priya gives her distributor exclusive New Zealand rights for three years. The distributor promises to buy at least 1,000 appliances in year one, 1,500 in year two and 2,000 in year three. If they only buy 600 units in year one, the agreement could say Priya may convert the arrangement to non-exclusive after giving 20 working days' notice and a chance to explain.

You can also narrow exclusivity instead of saying yes or no, or document it in a separate exclusivity agreement. For example, you could give exclusivity for independent kitchenware stores, while keeping online marketplaces, major national retailers or direct sales for yourself.

What Payment And Ordering Terms Should You Include?

You should include clear payment and ordering terms that answer when the distributor must pay, what they're buying and who carries the risk if something goes wrong in transit.

Distribution terms in NZ often become messy because the parties focus on sales potential and leave the operational details vague. That can lead to cash flow problems, rejected shipments or arguments over whether an order was properly accepted.

Your agreement should cover:

• Pricing: whether prices are fixed, set by a price list or reviewed from time to time
• Currency: whether invoices are in NZD, AUD, USD or another currency
• GST and duties: who is responsible for GST, import duties and customs costs, with tax advice taken where needed
• Payment timing: whether payment is upfront, on shipment, on delivery or within a set number of days after invoice
• Credit limits: the maximum unpaid amount the distributor can owe at one time
• Minimum orders: the smallest order size you'll accept and any annual purchase commitment
• Forecasts: whether the distributor must provide monthly or quarterly demand forecasts
• Risk and title: when ownership and risk in the goods pass to the distributor
• Shortages and defects: how quickly the distributor must inspect goods and report issues

For imported goods, you may also need to align the contract with your shipping documents and Incoterms. For example, if your invoice says the distributor takes risk when goods leave the overseas port, but the agreement says risk passes on delivery in Auckland, that mismatch can create a real problem if the shipment is damaged.

Who Is Responsible For Warranties, Consumer Guarantees And Product Recalls?

Both you and the distributor can carry responsibility, so the agreement should spell out who handles claims, who pays and who controls any recall.

Under the Consumer Guarantees Act 1993, consumers receive automatic guarantees about acceptable quality, fitness for purpose, matching description and other matters. Retailers deal directly with customers, but manufacturers can also have obligations. In some cases, an importer may be treated as the manufacturer if the overseas manufacturer doesn't have a place of business in New Zealand.

You usually can't contract out of the Consumer Guarantees Act for consumer sales. For business-to-business supply, the parties can sometimes contract out if the goods are acquired for business purposes and the contracting out is fair and reasonable. That wording needs care.

The Fair Trading Act 1986 also matters. It prohibits misleading or deceptive conduct, false claims about products and certain unfair contract terms in standard form consumer contracts and small trade contracts. A small trade contract generally means the trading relationship is worth $250,000 or less per year when the relationship first arises.

Your product recall clauses should cover:

• who monitors safety complaints and defect reports
• who decides whether a recall is needed
• who notifies MBIE's product safety team or other regulators if required
• who contacts retailers and customers
• who pays for refunds, repairs, replacements, freight and public notices
• what records the distributor must keep for traceability

If your goods are regulated, such as electrical items, children's products, cosmetics, food, supplements or vehicles, get tailored advice before signing. The recall plan should match the product's actual risk profile, not just use generic wording.

Can The Distributor Use Your Trade Marks And Marketing Materials?

Yes, but only on the terms you set in the agreement, and only for the purpose of selling the products.

Your brand is often one of the main reasons a distributor wants the deal. If the agreement simply says the distributor can use your materials, you may lose control over how your products are presented in the New Zealand market.

Your intellectual property clause should deal with:

• Trade marks: whether the distributor can use your names, logos and product marks, and whether they're registered with IPONZ
• Copyright: use of product photos, videos, packaging copy, manuals and website content
• Brand guidelines: colours, positioning, claims, disclaimers and approval processes
• Local marketing: who approves advertisements, influencer content, catalogues and retailer listings
• Online control: whether the distributor can register domain names, marketplace accounts or social media handles using your brand
• No ownership: confirmation that the distributor doesn't own your IP and must stop using it when the agreement ends

If the distributor collects customer data for warranties, loyalty programmes or product support, you should also consider the Privacy Act 2020. The contract should say what personal information can be collected, how it can be used, who can access it and what happens if there's a privacy breach.

Marketing emails and texts may also trigger the Unsolicited Electronic Messages Act 2007, so be clear about who is responsible for consents and unsubscribe processes.

Distribution Agreement Template: What Should You Include?

A template can be a useful starting point, but it should be tailored before you use it because distribution arrangements vary a lot by product, channel and risk.

Here is a practical outline you can use to brief your legal team or review a draft:

1. Parties: write the correct legal names, company numbers or NZBNs and addresses for notices.
2. Products: list the exact products covered and whether new product lines are automatically included.
3. Territory: define the area, such as New Zealand, a region or specific sales channels.
4. Exclusivity: state whether the rights are exclusive, non-exclusive or exclusive only for certain channels.
5. Term: set the start date, initial term and any renewal process.
6. Orders: explain how orders are placed, accepted, changed and cancelled.
7. Prices And Payment: cover pricing, currency, GST, credit limits, payment dates and late payment consequences.
8. Minimum Orders: set purchase targets, sales reporting and what happens if targets are missed.
9. Delivery, Risk And Title: say when risk and ownership transfer, and who pays freight, insurance and customs costs.
10. Product Compliance: allocate responsibility for labelling, safety standards, registrations and regulatory checks.
11. Warranties And Returns: explain who handles customer claims, repairs, replacements and refunds.
12. Recalls: set the recall process, decision-making rights, records and cost sharing.
13. Intellectual Property: grant a limited brand licence and set approval rules for marketing materials.
14. Confidentiality And Data: protect commercial information and set privacy obligations where customer data is shared.
15. Termination: list termination rights, notice periods and post-termination obligations.

That outline isn't a finished legal document. The wording needs to fit your products, bargaining position and compliance obligations, especially if the distributor will deal with consumers or regulated goods.

When Can You Terminate A Distribution Agreement?

You can usually terminate when the agreement allows it, so the safest approach is to write clear exit rights from the start.

Termination clauses matter because distribution relationships often involve stock commitments, customer pipelines and brand exposure. If the contract is silent, you may be left arguing about what is reasonable, which isn't where you want to be when the commercial relationship has broken down.

Common termination rights include:

• For convenience: either party can end the agreement after giving notice, often 30, 60 or 90 days depending on the deal size and stock cycle
• For unpaid invoices: you can suspend supply or terminate if payment is overdue after a cure period
• For missed targets: you can remove exclusivity or terminate if minimum purchase targets aren't met
• For serious breach: you can terminate for misuse of IP, false product claims, unauthorised discounts or selling outside the territory
• For insolvency: you can end the arrangement if the distributor can no longer pay its debts
• For safety issues: you can act quickly if there's a product defect, regulatory concern or recall risk

The agreement should also say what happens after termination. For example, can the distributor sell remaining stock for 60 days, or must they return it? Do they need to take down brand materials immediately? Who keeps warranty records? What happens to customer data?

If something has already gone wrong, start by checking the agreement, keeping copies of orders, invoices, sales reports and complaint records, and putting key conversations in writing. Then get advice before cutting off supply or ending the deal, because the right step depends on the wording and the commercial background.

Key Takeaways

• A distribution agreement in NZ should cover territory, exclusivity, sales targets, payment, ordering, warranties, recalls, IP use and exit rights.
• Exclusive rights can work well, but they should usually be tied to minimum orders, reporting and a right to remove exclusivity if targets are missed.
• The Consumer Guarantees Act 1993 and Fair Trading Act 1986 can affect who pays for customer claims, product issues and misleading marketing.
• Importers and overseas suppliers should be clear about product compliance, recall records and who contacts regulators or customers if a safety issue arises.
• Your trade marks, product photos and marketing materials should be licensed carefully, with approval rights and clear rules for ending use after termination.
• A template can help you plan, but a distribution contract should be tailored to your product, supply chain and New Zealand sales strategy.

If you'd like help with your distribution agreement, exclusivity terms, product warranty clauses or IP and recall provisions, you can reach us at 0800 002 184 or team@sprintlaw.co.nz for a free, no-obligations chat.