VAR agreement (value-added reseller agreement)

A VAR agreement is a legal contract between a manufacturer and a value-added reseller that specifies the rights and obligations of both parties. A VAR purchases a product from a manufacturer, adds value to that product in some way and then resells the product as its own. A VAR agreement specifies the conditions that must be adhered to throughout that process. 

The details of the VAR agreement contract may include:

• The specific products available to the VAR.
• How those products will be marketed. 
• The geographical area in which the VAR may resell the products. 
• The timeframe during which the contract is in effect.
• Exclusivity or non-exclusivity.
• Sales targets. 
• Conditions for product returns.
• Conditions for termination of the agreement.

It's important to ensure that a VAR agreement is in alignment with business goals and that its stipulations are realistic. Because VAR agreements are legally binding, a failure to meet the terms of the contract can result in not only premature termination of the agreement but also legal action and fines.