We signed a Confidentiality Agreement but...

SomethingAnonymous · 10-20-2009, 11:16 AM

Hi,

I'm new here to the forums. I have a question thought I would ask some people who have previous experiences.
We recently signed a confidentiality agreement with a company regarding a product that is NOT their design, nor is it patented.
We wanted to become a distributor of their product and they made us sign that and we did (mistakenly, please avoid replies of you shouldn't have

too late!)

The contract is a typical NDA sort of contract that says we're not allowed to make sales of the product without sharing the profits with this company etc etc.
But the problem we have is the supplier is proving to be very unreliable, with poor service. They give us prices that are not competitive and very slow in delivery.

So I'm wondering how valid that contract is if the product is NOT their design/patent and is easily available by other sources?
Unfortunately we have not been given a copy of the contract yet even though we have asked for it a few times otherwise I could paste paragraphs of the contract.

I would be thankful for any help I receive. Thank you.

LSnyder · 10-20-2009, 11:22 AM

Something,
I forwarded this to my employer. As soon as he has a chance to look at it, I will hopefully give you some kind of feedback.

GlobalWealth · 10-20-2009, 02:59 PM

Quote:

Originally Posted by SomethingAnonymous

Hi,

I'm new here to the forums. I have a question thought I would ask some people who have previous experiences.
We recently signed a confidentiality agreement with a company regarding a product that is NOT their design, nor is it patented.
We wanted to become a distributor of their product and they made us sign that and we did (mistakenly, please avoid replies of you shouldn't have

too late!)

The contract is a typical NDA sort of contract that says we're not allowed to make sales of the product without sharing the profits with this company etc etc.
But the problem we have is the supplier is proving to be very unreliable, with poor service. They give us prices that are not competitive and very slow in delivery.

So I'm wondering how valid that contract is if the product is NOT their design/patent and is easily available by other sources?
Unfortunately we have not been given a copy of the contract yet even though we have asked for it a few times otherwise I could paste paragraphs of the contract.

I would be thankful for any help I receive. Thank you.

I would need to see the NDA to give an answer. Who makes the product? If they don't own the design or the patent, are they just the distributor? Are there other distributors? Can you buy factory direct? What does the contract state about providing you with a signed copy? Can you document your requests for your signed copy?

SomethingAnonymous · 10-20-2009, 08:03 PM

Quote:

Originally Posted by GlobalWealth

I would need to see the NDA to give an answer. Who makes the product? If they don't own the design or the patent, are they just the distributor? Are there other distributors? Can you buy factory direct? What does the contract state about providing you with a signed copy? Can you document your requests for your signed copy?

I will provide you with parts of the NDA as soon as I get a copy. I can't remember what it said about providing us with a copy, but yes I can document our request for our signed copy because the requests were emailed.

They are not a manufacturer, they buy from someone else, we dont know who, my guess is either somewhere in China or a certain American company (that we know).
Yes, we can buy direct from the factory, they are just a distributor, I don't know if there are other distributors of the same factory source.

There are other factors to our advantage, but unfortunately they were are mentioned orally so I'm not sure how much they can come into play. For example, during our conversations on becoming their distributors they said we can work with them in 2 ways, either a 10% commission way or a 25% discount for us to buy and re-sell the product. When we requested a quote to buy some products from them, they provided us with a 12% discount only (we've never had a 25% discount). But of course, this was only mentioned orally.
Another matter is when we asked about the source of the product, they mentioned the product is a joint-venture. I know for a fact that is not the case. But again, this was only mentioned orally and not documented.

And finally, their website lists their product as CSA and UL certified, but I cannot find their brand name under the directory listing of neither CSA nor UL. Can that be helpful?

I appreciate your help and support while we're stuck with this situation!

GlobalWealth · 10-21-2009, 03:32 AM

Quote:

Originally Posted by SomethingAnonymous

I will provide you with parts of the NDA as soon as I get a copy. I can't remember what it said about providing us with a copy, but yes I can document our request for our signed copy because the requests were emailed.

They are not a manufacturer, they buy from someone else, we dont know who, my guess is either somewhere in China or a certain American company (that we know).
Yes, we can buy direct from the factory, they are just a distributor, I don't know if there are other distributors of the same factory source.

There are other factors to our advantage, but unfortunately they were are mentioned orally so I'm not sure how much they can come into play. For example, during our conversations on becoming their distributors they said we can work with them in 2 ways, either a 10% commission way or a 25% discount for us to buy and re-sell the product. When we requested a quote to buy some products from them, they provided us with a 12% discount only (we've never had a 25% discount). But of course, this was only mentioned orally.
Another matter is when we asked about the source of the product, they mentioned the product is a joint-venture. I know for a fact that is not the case. But again, this was only mentioned orally and not documented.

And finally, their website lists their product as CSA and UL certified, but I cannot find their brand name under the directory listing of neither CSA nor UL. Can that be helpful?

I appreciate your help and support while we're stuck with this situation!

If it were me, I would go to the source of the product and inquire about your distributor and the possiblity of becoming a distributor. Contract or no contract, you need to protect your business and your income stream and if this company is not providing you with the product or service to meet your needs, then you need to find an alternative solution. If you have a contract with them, they should be obligated to fulfill their end of the contract. If they are not fulfilling their side, it should make the contract voidable.

SomethingAnonymous · 10-21-2009, 01:02 PM

Quote:

Originally Posted by GlobalWealth

If it were me, I would go to the source of the product and inquire about your distributor and the possiblity of becoming a distributor. Contract or no contract, you need to protect your business and your income stream and if this company is not providing you with the product or service to meet your needs, then you need to find an alternative solution. If you have a contract with them, they should be obligated to fulfill their end of the contract. If they are not fulfilling their side, it should make the contract voidable.

The problem is they had a clause that said we're not allowed to do business with the same product for 2 years after or something like that. It was a pretty tight contract, I'm wondering about the validity of it considering they dont own the product design etc. and are just a distributor.

ICEMAN2 · 10-21-2009, 02:25 PM

Hi there ______________??

I placed a message under your profile.

I think, that seeing you didn't get a Copy, Day one, its not any good.

Call the Manufacturer, and ask if they still do business with "XXYYZZ" Company. Tell them what has happened, and see what the say.

Do you have a web site, for this Product(s)?

Is it a year round or seasonal Product?

Could you set up other distributors, etc......??

If so please PM me, ICEMAN2

Are you in the USA or Canada?

Good Luck

Thanks

Cal

GlobalWealth · 10-21-2009, 05:14 PM

Quote:

Originally Posted by SomethingAnonymous

The problem is they had a clause that said we're not allowed to do business with the same product for 2 years after or something like that. It was a pretty tight contract, I'm wondering about the validity of it considering they dont own the product design etc. and are just a distributor.

to question the validity, that is why I suggested contacting the source of the product. this just seems odd to me that a distributor forced you to sign this contract. for example, if I sold furniture from a distributor made by XYZ company and the distributor didn't fulfill their obligations, ie slow/no delivery, etc, then what prohibits me from going to the source if I have customers to satisfy? I doubt a contract would hold up in court in that case. Especially since they have yet to provide you with your copy.

SomethingAnonymous · 10-21-2009, 08:39 PM

We're based in Canada, and the contract was signed in Canada.
Like I mentioned, they don't produce the product, but they do sell it under their own brand.

The product is some sort of light bulbs. They're easy to find from other manufacturers. In terms of slow/no delivery, we've never really managed to order with them as their prices are too high and the customers never choose our option due to high prices. I appreciate the help and support. Thanks guys. Iceman, I'll be PMing you shortly.