Meaning
Contractual settlement rules dictate how remaining inventory is recovered and paid for following the cancellation of a distribution contract. Operating within commercial distribution agreements, post termination repurchase clauses specify whether the manufacturer must buy back remaining unsold stock held by the outgoing distributor. The mechanism prevents former channel partners from dumping branded goods into unauthorized discount channels or grey markets.
Repurchase options define specific timelines for inventory inspection and shipping.
Obligation Scope
Terminated distributors must submit verified inventory schedules detailing unit quantities, batch numbers and warehouse locations. Applying post termination repurchase terms obligates the manufacturer or incoming distributor to clear merchantable stock from the former partner facility within thirty to ninety days. Outgoing distributors are prohibited from selling remaining inventory to third parties once repurchase rights are exercised.
Excluded from repurchase are damaged or obsolete products.
Price Determination
Valuation formulas establish repurchase prices based on original net wholesale purchase prices minus administrative deductions. Contractual post termination repurchase formulas subtract applicable restocking fees, return transport costs and unearned promotional allowances from the final settlement payment. Inventory with damaged packaging undergoes markdown valuation or total exclusion.
Settlement funds are issued as credit offsets or direct bank transfers following inspection.
Title Recovery
Re-acquiring stock transfers physical possession and legal ownership back to the supplier or designated successor. Former distributors relinquish selling rights immediately upon receipt of repurchase funds. Physical retrieval of stock completes contractual separation between trading partners.
