It is important for a supplier or manufacturer, when considering how best to market, sell or distribute his products, to be aware of the difference, in legal and practical terms, between appointing an agent and a distributor.
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An agent is an intermediary involved in making a contract between his principal and the principal's customer. A distributor buys products from the supplier or manufacturer and then sells them on to his customers adding a margin to cover his own costs and profit. We frequently assist our clients with determining which option is best suited to their commercial objectives and draft and negotiate the relevant commercial agreement to ensure that our clients have as much legal protection as possible in their dealings with their agents and distributors.
Preparation of an agency or distributor agreement also helps to focus clients on the practical and commercial issues they need to consider when entering into such a relationship.
We also advise our clients on the impact of the Commercial Agents Regulations which impose certain obligations on agents and their principals in respect of the term of the agency agreement, specific duties of each party and commission and compensation for termination of the agency agreement. Many of these regulations cannot be excluded by an agreement between the parties.
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