What are minimum purchase commitments?

Minimum purchase commitments are a contractually agreed minimum quantity or value of products the distributor must purchase in a given period. Failure may result in loss of exclusivity or a compensation payment.

How long can an exclusive distribution agreement last?

There is no statutory maximum. In practice, exclusivity is agreed for 1–3 years with an option to extend upon meeting performance targets.

Can the distributor sell online through an e-shop?

It depends on the contract. Distribution agreements can restrict online sales (passive sales outside the allocated territory), but a complete ban on online sales is prohibited in the EU under the Vertical Block Exemption Regulation (2022/720).

What is sell-through vs. sell-in?

Sell-in is the sale from the manufacturer to the distributor. Sell-through is the distributor's sale to the end customer. For setting minimum purchase commitments sell-in is relevant; sell-through is more important for performance measurement.

Commercial

Distribution agreement

Distribution agreement — sell through a network

Exclusive or non-exclusive distribution with clear territorial boundaries.

Start free Features

GDPR compliant · EU-hosted

Companies with exclusive distribution agreements have 31 % higher market share in the given region

Minimum purchase commitments reduce the risk of a passive distributor by 60 %

Distribution disputes without a contract cost an average of €25,000 to resolve

A distribution agreement defines products, prices, minimum purchase commitments, exclusivity, marketing and exit terms. AI generates it for physical and digital products.

Legal context

Distribution agreements are unnamed contracts governed by freedom of contract. Pricing restrictions must comply with EU competition rules (Art. 101 TFEU) — vertical agreements are permissible within limits set by the Vertical Block Exemption Regulation.

Commercial Code § 269(2); TFEU Art. 101 — vertical agreements permissible within Vertical Block Exemption Regulation

Legal basis & glossary

When to use a Distribution agreement

When entering a new market through a local distributor
For selling a physical product through retail or wholesale
For distributing software or digital licences
When building a reseller partner programme

What you get

Exclusivity and territory
Minimum purchase commitments
Pricing policy (MSRP)
Marketing obligations

How it works

From idea to signature

Exclusivity and territory

Minimum purchase commitments

Pricing policy (MSRP)

FAQ

Frequently asked questions about Distribution agreement

No — resale price maintenance (RPM) is prohibited in the EU as a competition law violation. You may set a recommended retail price (MSRP) but not a mandatory one.