Distribution agreement in Kenya: Template, Key Clauses and Local Law (2026)

What a distribution agreement is under Kenyan law A distribution agreement is a contract where a supplier appoints a distributor to buy its products and resell them in a defined territory. In Kenya the distributor normally buys stock on its own account and resells at its own prices and risk. That is different from an agency arrangement, where an agent sells in the supplier's name for commission and the supplier keeps title until the customer buys. The two are taxed and treated differently, so draft and label the contract to match what the parties really do. Kenya has no single statute dedicated to distribution agreements. The contract is governed by ordinary Kenyan contract law. The law that most affects a distribution deal is competition law, because exclusive territories and resale terms can fall foul of the rules against anti competitive agreements. Several other laws apply depending on the product and the parties. This page is general information, not legal advice. Confirm the current position with a Kenyan advocate before you sign. ## The local law that shapes the deal Competition law. The Competition Act (Cap. 504), enforced by the Competition Authority of Kenya (CAK), governs agreements that may prevent, distort or lessen competition. Exclusive distribution is not banned outright. Kenyan courts have confirmed that exclusive vertical terms are not inherently illegal, and the question is whether the arrangement substantially lessens competition. The terms that draw scrutiny are resale price maintenance enforced by penalties, and territorial limits that block active sales. Parties with low market shares and no indefinite restraints are usually at lower risk, and an exemption can be sought from the CAK where a deal has public benefits. Resale price maintenance. Setting the price your distributor must charge, and enforcing it with threats or refusal to supply, is the kind of term most likely to breach the Act. Recommended prices are safer than fixed minimums. Product standards and imports. Regulated goods must meet Kenya Bureau of Standards (KEBS) requirements, and imported goods clear Kenya Revenue Authority customs. Food, drugs and other controlled products carry their own licensing. Tax. VAT applies to the supply of goods once the turnover threshold is crossed. Withholding tax can apply to certain payments. Payments abroad follow the relevant exchange and tax rules. ## A distribution agreement template you can adapt ```

DISTRIBUTION AGREEMENT This Agreement is made on [date] BETWEEN [Supplier name], of [address] (the "Supplier") AND [Distributor name], of [address] (the "Distributor") 1. APPOINTMENT The Supplier appoints the Distributor to distribute the Products in Schedule 1 in the Territory. The appointment is [exclusive / sole / non-exclusive]. 2. TERRITORY The Territory is [counties / regions of Kenya, or "the Republic of Kenya"]. The Distributor will not actively sell outside the Territory. 3. TERM AND RENEWAL This Agreement runs for [number] years and renews for further [number] year periods unless either party gives [number] days written notice. 4. ORDERS, PRICE AND PAYMENT The Distributor buys Products on its own account at the Supplier's list price less [discount]. Payment is due within [number] days of invoice. Title and risk pass on [delivery point]. 5. RESALE PRICING The Distributor sets its own resale prices. The Supplier may suggest, but not require, resale prices. 6. MINIMUM PURCHASE The Distributor will buy at least [quantity or value] each [year]. Failure may convert an exclusive appointment to non-exclusive. 7. OBLIGATIONS The Distributor promotes and sells the Products, holds adequate stock and keeps to KEBS and other laws. The Supplier supplies conforming Products and honours the warranty in Schedule 2. 8. INTELLECTUAL PROPERTY The Distributor may use the Supplier's trademarks only to sell the Products and gains no rights in them. 9. TERMINATION Either party may end this Agreement on [number] days notice, or at once for material breach not cured within [number] days, insolvency, or change of control. On termination the Supplier may buy back unsold stock at [price]. 10. LIABILITY Neither party is liable for indirect or consequential loss. Each indemnifies the other for loss caused by its breach. 11. GOVERNING LAW AND DISPUTES This Agreement is governed by the laws of Kenya. Disputes will be resolved by [arbitration in Nairobi / the courts of Kenya]. SIGNED for the Supplier ____________ SIGNED for the Distributor ____________

- Exclusive territory with no minimum purchase, leaving the supplier locked in with no volume.
- Territorial bans drawn so widely they block legitimate competition.
- Labelling a deal distribution but drafting it like agency, so title and liability sit wrongly.
- No termination or buy back clause, so unsold stock and trademark use are left unresolved at the end.
- A foreign governing law with no realistic way to enforce the result in Kenya. ## Keeping distribution contracts consistent as you grow A distributor rarely signs just one agreement. It signs the same template many times over, with different territories, discounts, minimum targets and renewal dates, and each copy slowly drifts from the others. The real work is not drafting the first agreement, it is keeping all of them consistent and knowing which renewal or target is next. That is the same problem every contracting business has: drafting from a house template, catching a clause that sits oddly against competition law, editing a term across many documents, and tracking the dates that matter, all in one place. [Adira](https://adiralaw.com) is built around that single workspace idea, with the deepest coverage today for Indian corporate law and other jurisdictions being broadened. Kenya specific depth is on the roadmap rather than in place today, so for a Kenyan deal use the template above and have local counsel confirm it. The point worth taking is that contracts are easier to trust when drafting, review and renewal tracking live together instead of scattered across inboxes.