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The Limited Risk Distribution Agreement is utilized when establishing a distribution relationship in the Philippines where parties seek to clearly define and limit the distributor's exposure to business risks. This arrangement is particularly relevant for international companies entering the Philippine market who wish to maintain greater control over operations while providing their local distributor with a more predictable business model. The agreement must comply with Philippine legislation, including the Civil Code, Competition Act, and Consumer Act, while addressing specific aspects of risk limitation such as inventory management, pricing mechanisms, and market fluctuation protections. It's commonly used when the principal wants to retain significant control over the distribution strategy while offering the distributor a more stable margin structure.

1. Parties: Identification of the principal and distributor, including complete legal names and addresses

2. Background: Context of the agreement, relationship between parties, and purpose of the limited risk distribution arrangement

3. Definitions: Key terms used throughout the agreement, including specific Filipino legal terms if applicable

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

5. Limited Risk Nature: Clear definition of the limited risk arrangement and specific risk allocation between parties

6. Products: Description of products covered by the agreement and any restrictions

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

8. Orders and Delivery: Process for ordering, delivery terms, and related logistics

9. Performance Targets: Minimum purchase requirements and performance metrics

10. Marketing and Promotion: Marketing obligations and restrictions, use of trademarks

11. Compliance: Obligations to comply with Philippine laws and regulations

12. Term and Termination: Duration of agreement and termination provisions

13. Post-Termination: Rights and obligations after termination

14. Confidentiality: Protection of confidential information and trade secrets

15. Governing Law and Dispute Resolution: Choice of Philippine law and dispute resolution mechanisms