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The Limited Risk Distribution Agreement is utilized when companies wish to establish a distribution relationship in Canada while maintaining centralized control over key business risks and strategic decisions. This model is particularly relevant for multinational companies seeking to maintain consistent operations across different jurisdictions while complying with Canadian legal requirements. The agreement typically includes detailed provisions on risk allocation, pricing mechanisms, performance metrics, and compliance requirements. It is especially suitable for situations where the principal wants to maintain significant control over the distribution chain while providing the distributor with a stable, lower-risk business model. The document addresses key aspects such as product ordering, inventory management, marketing responsibilities, and territorial rights, all while ensuring the limited risk nature of the distributor's role is clearly defined and maintained.

1. Parties: Identification of the principal/supplier and the distributor, including full legal names and addresses

2. Background: Context of the agreement, business relationship, and intention to establish a limited risk distribution arrangement

3. Definitions: Key terms used throughout the agreement, including specific definitions related to limited risk structure

4. Appointment and Territory: Scope of distributor's appointment, territorial limitations, and exclusivity provisions

5. Limited Risk Structure: Core provisions defining the limited risk nature of the relationship, including risk allocation and compensation model

6. Product Orders and Delivery: Process for ordering products, delivery terms, and related obligations

7. Pricing and Payment Terms: Pricing mechanism, payment terms, and currency provisions

8. Performance Targets: Minimum purchase requirements and performance metrics

9. Marketing and Promotion: Marketing obligations, cost allocation, and approval requirements

10. Intellectual Property: License to use trademarks and other IP, restrictions, and protection obligations

11. Compliance: Regulatory compliance requirements and reporting obligations

12. Term and Termination: Duration of agreement, renewal provisions, and termination rights

13. Post-Termination: Obligations and rights after termination

14. General Provisions: Standard boilerplate clauses including governing law, notices, and amendment procedures