Overview of a VAR Reseller Agreement
What is a VAR Reseller Agreement?
A VAR Reseller Agreement is a legally binding contract between a supplier and a reseller firm for reselling their product by adding some value to it.
A VAR Reseller Agreement protects the rights of the reseller by legally allowing them rights to add value to the third-party products and resell them with additional profit margin.
A VAR Reseller Agreement also helps in enhancing the product quality through value addition that leads to a better customer experience.
What does a Value-Added Reseller do?
A VAR (value-added reseller) is a business or a company that specializes in reselling products or services, commonly in the IT and technology sectors, by adding features or services or developing products or services to resell as a complete package with added value.
The added value comes from either combining a number of independently sourced products from different suppliers or adding services such as consulting, customizing, support or training.
What are the things to include in the VAR Reseller Agreement?
A VAR Reseller agreement is a legal contract between a manufacturer or a developer of a product or service, and a value-added reseller, which sets out the rights and obligations of both parties. Some of the important points to include in a VAR Reseller Agreement are:
Product description: A brief summary of the specific product or service that the VAR is aiming to develop, or adding a detailed description of the product as an attachment to the agreement.
Exclusivity or non-exclusivity: It specifies if the VAR is the only person who is allowed to work on the specific product/service that is provided by the manufacturer. Since there are different VARs who would develop the product/service in different countries but would include an exclusivity clause on a specific industry or field, such as the insurance industry or military field for example. It also includes the geographical area in which the VAR may resell the products.
Product price: This clause set out the specific prices of each and every product/service for the VAR to purchase, and it can be set out in a detailed attachment, with a disclaimer stating that the prices are subject to changes if needed, stating the written notice period of any possible changes.
License: Giving an official license to VARs by the manufacturer is essential to proceed developing and adding features to the product, in order to create a value-added product that both parties can profit from. This section can include any sub-licensing to other companies that may have a role in the development of the product.
Confidentiality: Accessing confidential documents or information about the product can be essential for the development of the product, which urges the need of including provisions regarding the usage of the confidential information and the persons who are allowed to access them.
Term and Termination: VAR agreements take effect for a specific period of time, which is called the term of the contract. This section of the agreement should state the exact date that the agreement will take effect and the term of the contract. The termination of the VAR agreement may happen for any breach of the contracting parties’ obligations, or other reasons that the parties agree on, which can be stated in a clause within the agreement.
Governing Law: As conflicts may arise between parties regarding the VAR agreement, a clause that set out the governing law that will be applicable to the dispute can help in informing the parties on their rights and the possible legal actions that can be taken to settle any dispute that may arise between them.
Since a VAR usually purchases a product or a service from a manufacturer or a developer, and adding value to that product or service by adding more features and development to it, and then reselling the product as its own, a VAR agreement specifies the conditions that must be adhered to and respected by both parties throughout that process.
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