The Letter of Intent for Distributorship serves as a crucial preliminary step in establishing distribution relationships in Malaysia. It is typically used when parties have progressed beyond initial discussions but need a structured framework before committing to a full distributorship agreement. This document outlines key commercial terms, territorial rights, and basic obligations while maintaining flexibility for future negotiations. Under Malaysian jurisdiction, while primarily non-binding, certain provisions like confidentiality can be enforced. The document helps parties align expectations, conduct due diligence, and progress towards a final agreement while considering local regulatory requirements, including the Competition Act 2010 and Distribution of Trade Act 1957.
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1. Parties: Full legal names and addresses of both the manufacturer/supplier and the proposed distributor
2. Background: Brief context of the parties' discussions and purpose of the LOI
3. Definitions: Key terms used in the letter requiring clear definition
4. Purpose and Scope: Clear statement of intent to enter into a distributorship agreement and broad outline of the proposed relationship
5. Proposed Territory: Geographic area where distribution rights will be granted
6. Product Range: Overview of products to be covered under the proposed distributorship
7. Exclusivity Status: Whether the distributorship is intended to be exclusive or non-exclusive
8. Key Commercial Terms: Outline of major commercial points including pricing structure, minimum purchase requirements, and payment terms
9. Duration: Proposed term of the future distributorship agreement
10. Due Diligence: Framework for information exchange and evaluation process
11. Confidentiality: Obligations regarding confidential information exchanged during negotiations
12. Non-Binding Nature: Clear statement that the LOI is non-binding except for specified clauses
13. Timeline: Proposed schedule for negotiation and execution of the final agreement
14. Governing Law: Statement that the LOI is governed by Malaysian law
15. Signatures: Execution block for both parties
1. Exclusivity Period: Period during which parties agree not to negotiate with other potential partners - include when seeking negotiation exclusivity
2. Deposit Terms: If applicable, details of any deposit or commitment fee required - include when upfront financial commitment is needed
3. Marketing Commitments: Preliminary marketing and promotion expectations - include for high-value distribution relationships
4. Regulatory Compliance: Specific regulatory requirements for the industry - include for regulated products
5. Break Fee: Compensation if either party withdraws - include in high-stakes negotiations
6. Intellectual Property: Basic terms for IP usage during negotiation period - include when IP exposure exists during negotiation
1. Schedule 1 - Initial Product List: Preliminary list of products intended to be covered by the distributorship
2. Schedule 2 - Territory Map: Visual representation of the proposed territory
3. Schedule 3 - Preliminary Price List: Indicative pricing structure and terms
4. Schedule 4 - Timeline: Detailed timeline for negotiation, due diligence, and execution of final agreement
5. Appendix A - Company Profiles: Brief overview of both parties' business operations and relevant experience
Authors
Relevant legal definitions
Clauses
Relevant Industries
Consumer Goods
Electronics and Technology
Automotive
Pharmaceuticals and Healthcare
Food and Beverage
Industrial Equipment
Fashion and Apparel
Construction Materials
Agricultural Products
Chemical Products
Telecommunications
Software and Digital Products
Relevant Teams
Legal
Commercial
Sales
Business Development
Supply Chain
Operations
International Trade
Procurement
Compliance
Finance
Strategic Planning
Relevant Roles
Chief Executive Officer
Commercial Director
Sales Director
Business Development Manager
Legal Counsel
Contract Manager
Supply Chain Manager
Distribution Manager
Regional Sales Manager
Operations Director
Chief Commercial Officer
Procurement Manager
Managing Director
Country Manager
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