Businesses often use intermediaries to sell products for example in other territories or markets.
The choice of whether to use a distributor or agent is important as the two are very different.
Distributors generally buy and sell on their own account and so carry the risks of buying and re-selling stock from the supplier. Aside from other terms relevant to the distributorship to be included in the distribution agreement arrangements between the supplier and distributor need to cover the terms of sale between themselves.
An important consideration for both parties is whether the distributor is to be sole, exclusive or non-exclusive. In the case of an exclusive distributorship agreement, the supplier may require minimum purchase obligations on the distributor. While the distributor will want assurance as to the support to be provided by the supplier, the supplier will want to impose obligations on the distributor aimed at ensuring effective distribution of its products. Competition law will be relevant in relation to the restrictions which can be imposed on the distributor.
Selling through sales agent s is very different. Usually the contract for the sale of the product is made between the supplier and end customer and the agent is paid a commission on the sale price under the agency agreement between it and the supplier. It is important to be aware of terms which are implied into an agency agreement under legislation or the common law. Unusually for contracts made under English law, these implied terms include duties to act in good faith which apply to both parties. Where the commercial Agents Regulations 1993 apply, this will tend to favour the agent including providing for a right, dependent on the circumstances, for the agent to receive a compensation or indemnity payment on termination of the agency agreement.
Our commercial lawyers have drafted and advised on numerous agency agreements and distribution agreements for businesses in a wide range of sectors.
For businesses which sell directly to customers overseas without using intermediaries we also have experience and skills and a strong interest in assisting businesses seeking to export (or import) products.
If you would like legal advice or assistance in relation to putting in place or entering into an agency agreement or a distribution agreement, please contact one of our commercial lawyers on 08081668827.
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Disclaimer:
Information on this website is provided for general information purposes only. It is not intended to constitute and should not be relied upon as legal advice. There are a number of factors and circumstances which may be relevant to legal advice. The law may also have changed before we are able to update the information on this website. If legal advice is required, please contact us on 08081668827.
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