Distribution Agreement in Hong Kong: Template, Key Clauses and Local Law (2026)

A distribution agreement is a contract where a supplier (the principal) appoints an independent business (the distributor) to buy its products and resell them, in the distributor's own name and for its own account, inside a defined territory. The distributor takes title to the goods and carries the stock and credit risk. That is what separates a distributor from a commercial agent, who only solicits orders for a commission and never owns the goods. In Hong Kong there is no statute you fill in to create a valid distribution agreement, and no distributor-protection law. The contract rests on freedom of contract and common law, with the Competition Ordinance setting the outer limits on resale pricing and territory. This guide sets out the local law that actually bites, the clauses a Hong Kong distribution agreement should contain, and a section-by-section skeleton you can adapt. It is general information, not legal advice. Confirm the detail with qualified Hong Kong counsel before you sign. ## Hong Kong: the local law that shapes your agreement Hong Kong has no commercial agency statute and no distributor-protection regime. A distribution agreement is governed by its own terms and by common law, so the parties have wide freedom to agree what they want. There is no statutory goodwill indemnity on termination. For an open-ended agreement with no notice clause, the common law will usually imply a term that reasonable notice must be given before either side ends it, with the length judged on the facts. ### The Competition Ordinance The main external constraint is the Competition Ordinance (Cap 619), which came into full effect on 14 December 2015 and is enforced by the Competition Commission, with cases decided by the Competition Tribunal. Two rules matter for distribution. The First Conduct Rule prohibits agreements that have the object or effect of harming competition. The Second Conduct Rule prohibits abuse of substantial market power. Resale price maintenance, meaning fixing or imposing a minimum resale price, is treated by the Commission as conduct with an anti-competitive object and is a serious concern. Absolute territorial protection that blocks passive sales raises similar issues. Exclusive and selective distribution are generally acceptable where they are unlikely to harm competition in the relevant market, and the Ordinance has exclusions, including a turnover threshold below which the First Conduct Rule does not apply to agreements between smaller undertakings. Draft on the basis that recommended and maximum resale prices are usually fine while minimum and fixed prices are not. ## The clauses a Hong Kong distribution agreement should contain A workable distribution agreement sets out the commercial deal and the legal protections together. The core clauses are: - Appointment and territory. Name the parties and products, define the territory, and say whether the appointment is exclusive, non-exclusive or selective. Exclusivity drives both the commercial value and the competition analysis.

• Products and changes. Define the product range and say what happens when the supplier adds, discontinues or reformulates a product.
• Sales targets and minimums. Minimum purchase or sales targets, how they are measured, and the consequence of a miss (often loss of exclusivity rather than automatic termination).
• Pricing and payment. The supplier may set its wholesale price and recommend a resale price, but should not fix or impose a minimum resale price. Set payment terms, currency, taxes and credit limits.
• Orders, delivery and risk. The ordering process, lead times, delivery terms (an Incoterms rule), and when title and risk pass.
• Intellectual property and brand. A limited licence to use the supplier's trade marks for resale only, with brand and quality standards, and a statement that no goodwill in the marks transfers to the distributor.
• Marketing and online sales. Marketing commitments and the rules on website and marketplace selling.
• Warranties, product liability and recalls. Who stands behind the product, and how claims and recalls are handled.
• Term, renewal and termination. Fixed or open-ended term, renewal mechanics, and termination for cause, insolvency and change of control, with the notice each requires. A clear notice clause avoids the common-law reasonable-notice argument.
• Post-termination. Stock buy-back, run-off sales, return of materials and survival of confidentiality.
• Confidentiality, data protection and non-compete. Confidentiality, a data protection clause fit for the Personal Data (Privacy) Ordinance, and any reasonable post-term non-compete.
• Governing law, language and disputes. The governing law, the court or arbitration seat, and the contract language. ## A distribution agreement skeleton you can adapt Use this running order as a drafting checklist. It is a skeleton, not a finished contract, and it is not legal advice. 1. Parties and recitals

2. Definitions
3. Appointment, territory and exclusivity
4. Products and product changes
5. Distributor obligations (targets, stock, promotion, standards)
6. Supplier obligations (supply, support, training, materials)
7. Pricing, orders, delivery, title and risk
8. Intellectual property and trade mark licence
9. Marketing, online selling and resale conditions
10. Warranties, product liability, recalls and insurance
11. Confidentiality and data protection
12. Term and renewal
13. Termination and notice periods
14. Consequences of termination (stock, run-off, non-compete)
15. Governing law, jurisdiction or arbitration, and language
16. Boilerplate (assignment, force majeure, notices, anti-bribery, entire agreement) ## Common mistakes to avoid - Treating a cross-border template as plug and play. A clause that is fine in one country can breach competition law in another, especially on resale pricing and territorial restrictions.

• Fixing the resale price. A recommended or maximum price is usually acceptable, a fixed or minimum resale price is treated as a serious restriction under the Competition Ordinance.
• Leaving notice to the common law. With no notice clause, a court can imply a reasonable-notice term and argue about its length. Set the notice period expressly.
• Over-restricting online sales. A blanket ban on a distributor selling online can raise competition concerns. Set proportionate conditions instead.
• Keeping no records. Targets, price changes, renewals and notice deadlines all need tracking. A missed renewal or a late notice undoes careful drafting. ## Keeping the agreement alive after signing The work does not stop at signature. A distribution agreement sets minimum targets to track, a term and renewal date to diarise, price lists that change, and termination notice windows you cannot afford to miss. Most disputes come not from a badly drafted clause but from a renewal that auto-extended unnoticed or a notice served a week too late. That is the case for keeping drafting, review, version history and obligation tracking in one place rather than spread across email, a shared drive and a spreadsheet. Adira is one such AI workspace: you draft from your own templates, see each clause flagged as favourable, neutral or unfavourable to you, edit clauses in plain English, and keep a live timeline of every version, renewal and obligation, built on Anthropic's Claude. Adira is India-first today; deeper support for Hong Kong law is on its roadmap rather than live, so treat it as a workflow layer here and keep local counsel for the legal substance.