Prior to going into any relationship with a distributor/agent in Korea, please read my post entitled: Finding a Korean Distributor: The Top 10 Things to Know Before Going to Bed with a Distributor in Korea. Please read that post in combination with this post, prior to engaging a distributor in Korea.
We see too many Korean distribution and agency agreements that are merely spun U.S. or European agreements. Please have your Korean distribution agreement and all agreements you have in Korea drafted by an experienced and proactive attorney who has on-the-ground experience in Korea. We see too many issues that could have been easily resolved by a carefully drafted agreement and a little due diligence. For other articles on Korean Distribution Agreements, see: IPG Legal’s Business Law Archive.
Issues to consider for your Korean Distribution Agreement:
- Will your distributor in Korea be your agent? If the Korean distributor is an agent, generally, you will only be paying your agent in Korea a commission, and you will directly invoice the buyer.
- Will your Korean distributor be your exclusive distributor? How long will the relationship last? How can the relationship be terminated? Territory? Scope?
- What occurs after the termination of the relationship with the Korean distributor? Return of products, buy back inventor, etc.?
- Dispute resolution mechanisms? Venue? Arbitration?
- Have you created a franchise? If so, we have some more talking to do. The requirements for franchising in Korea are much more cumbersome than a mere distribution relationship.
- Have you registered your trademarks? Korea is a first-to-file nation. If you have an agreement with a distributor, you may be protected even without registering your trademarks; however, register and avoid issues with others.
- Did you conduct thorough due diligence on the distributor? Did you read our article on Vetting your Korean distributor?
- Who handles warranty claims, distribution, support, marketing, etc.?
- Is the party signing the agreement authorized to sign the agreement? Make sure the agreement is properly executed.
We see too many distribution agreements that are mere spun British, German and U.S. agreements. Please have your distribution agreement and all agreements you have in Korea drafted by an experienced, proactive attorney with on-the-ground experience in Korea. We see too many issues that could have been easily resolved by a carefully drafted agreement and a little due diligence.
by Sean Hayes
Sean Hayes 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. Sean is ranked, for Korea, as one of only a few non-Korean lawyers as a Top Attorney by AsiaLaw. Sean is regularly quoted by leading international media outlets, including The Wall Street Journal, The New York Times, France 24, and Bloomberg.
IPG Legal is consistently ranked a Top Dispute Resolution Law Firm for our litigation, arbitration, and mediation services, and IPG Legal is consistently rated a top-tier law firm in corporate law, litigation, arbitration, franchise law, distribution law, estate law, family law, employment & labor law, and criminal defense.
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