VAR Distribution Agreement

How To Use

This review list is provided to help you prepare the VAR Agreement and negotiate the terms appropriate for your business. Certain terms and conditions have been imbedded in the text that require your careful examination. Among them are prepaid freight due to the almost universal requirement of this by VARs and its relatively low cost as a percentage of sales in this business for the Developer. The initial term is specified as 2 years because that has usually been enough time for both parties to recoup their investment in the relationship but not too long to encourage sloth on the job. An exclusive VAR document has not been prepared because few are used and they tend to be deadly for the Developer if they are done.

  • The Value-Added Reseller Agreement provides for a software developer to sell its programs to a reseller, who then may combine the programs with other software or hardware. The combinations are then marketed as “value-added” products.  Many VARs call themselves by that name but are really just resellers. Therefore the agreement has provided for that option. Make sure these terms are appropriate for your situation.
  • Laws vary from state to state and change over time, especially with regards to distribution agreements such as these. Having a fixed two-year term, however, provides a termination point and avoids a flexible date that can be attacked in Court. One can lose anytime you go up the people in the black robes, but this fixed term date tends to limit your liability. If you are unduly concerned about the possibility for litigation with a potential VAR, either don’t do business with them or have an “As is” per order agreement, as opposed to a territory or larger agreement.
  • Print at least two copies so both parties retain an original. Make an extra copy for the your sales file and keep a master file of these sales agreements.