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Agency Distribution Agreements

If you are going to act as an agent or a distributor for a product manufacturer or main supplier, you will be required to sign a contract which will regulate your relationship with them.  It is important to have good legal advice from an experienced solicitor in order to understand the legal framework and the detailed terms of the agreement.  

Agency agreements

There are different forms of agency agreement. An agent may have authority to negotiate and enter into contracts on the principal’s behalf or they may be a representative of the principal but without authority of this kind.  Each type of agency may be exclusive or non-exclusive.  If it relates to the sale and purchase of goods, it is likely that the agency will be subject to the Commercial Agents Regulations.  These regulations provide for methods of compensation to the agent if the principal terminates the relationship.

Distribution agreements

A distribution agreement has similarities to an agency agreement.  However, the main difference is that the distributor enters into the contract with the end-user customer on its own behalf and the manufacturer is not involved, except by way of manufacturer’s guarantee or warranty and product liability. There are exclusive, non-exclusive and sole distribution agreements. There are often competition issues to be considered with exclusive and sole distribution agreements and these need to be more tightly drawn than a non-exclusive agreement because both parties have more at stake and the relationship is closer to that of a franchise.

In both agency and distribution agreements there will be terms setting out the duration of the arrangement, the obligations of the parties, payment arrangements, intellectual property rights and what happens when the agreement ends.   There may also be provisions relating to reporting, accounts and records, training, marketing and so on.

Our solicitors can advise businesses entering into agency and distribution agreements and can help to ensure that you understand the legal relationship and negotiate an agreement that is right for you.

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