Distribution and Agency Agreements
As your business grows, you may need to involve others who have greater resources. Having a commercial agent or distributor can take your business to the next level, but it is essential to have written agreements in place to safeguard your interests.
- A supplier has more control over the activities of a commercial agent than it would of a distributor. Therefore, an agency arrangement is more appropriate in situations where the supplier wishes to maintain tight control over the marketing and pricing of its products
- An agency agreement is much less likely to be at risk of falling foul of competition law
- The supplier can pass on a lot of the risk associated with the products to the distributor
- Since it takes on greater risk of failing to sell the products, a distributor should be more motivated and is likely to have more resources to sell the stock it purchases from the supplier
- The supplier would only need to monitor accounts with the distributor as opposed to a number of individual customers
- Unlike the position of agents, the supplier is not responsible for providing compensation to a distributor on termination of the distribution agreement
How can we help you
It is vital to clearly specify whether the relationship between the supplier and intermediary is one of agency or distributorship, particularly in view of the Commercial Agents legislation. A lack of distinction between the terms can lead to unnecessary problems and potential litigation.
We will help you recognise the main constraints, both legal and practical, that affect agency and distribution agreements in the UK, and ensure key issues, a few of which can be found below, are covered:
- Obligations of Agent / Distributor
- Conditions of Sale
- Minimum Targets
- Exclusivity
- Duration
- Territory
- Risk
- Liability and Indemnity
- Intellectual Property Protection
- Termination
As IP rights are territorial, you may need to secure intellectual property rights in other countries before engaging a business agent or distributor.
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