Back
Marches Leisure (The Shrewsbury Club) and Holmer Park Spa and Health Club (Herefordshire)
Corporate and commercial legal advice regarding business acquisitions....
Distribution Agreements & Agency Agreements Solicitors.
When you set up a relationship with an intermediary such as an agent or distributor, you are essentially sub-contracting the marketing and sales function of your business.
You may choose to do this to take advantage of an agent’s or distributor’s local knowledge and established trade connections in a particular geographical region, or to save time and expense in establishing your own sales and marketing operation.
The labels “agent” and “distributor” are commonly used interchangeably which can become confusing. An agent acts on your behalf when seeking, negotiating and concluding business contracts with the ultimate purchaser of the goods. The agent is generally not a party to the contract between you and your customer and will not have rights or obligations under it. The agent’s acts are generally treated as those of its principal.
A distributor, on the other hand, buys goods from you and then sells them on to its customers. When you supply goods to the distributor you enter into a relationship of seller and buyer, and when the distributor resells to the public it does so on its own behalf so that it will be liable to customers for performance of the contract of sale. Although the relationship between the parties is close, it does not amount to one of agency. Contrast this with the agency position where the only contract for sale of the goods is between you and the customer. The agent generally has no contractual liability to your customer. It is important to distinguish between agency and distributor relationships as there are a number of practical consequences at law depending on the type of relationship.
These include:-
- responsibility for defective products
- determination of the parties’ rights and duties
- impact of the insolvency of the agent/distributor
- potential for contravention of competition law, especially if the agreement contains provisions which restrict competition
Once you have taken the decision to use an intermediary, your business objectives will determine which of an agency or distributorship arrangement is most appropriate.
Whichever type of intermediary arrangement you decide to opt for, it is prudent to set out the terms of the arrangement in a written agreement. A written agency agreement will define the authority and duties of the agent and set out the agent’s rights. The structure of a distribution agreement will be different to reflect the fact that the distributor buys goods outright. In addition you are likely to want to impose restrictions on competition.
Our Distribution & Agency Agreements Expertise
Here at Lanyon Bowdler, we have vast experience in dealing with distribution and agency agreements. Our friendly and approachable team will be more than happy to help, so get in touch today.
How can we help?
The Business Contract Lawyers at Lanyon Bowdler are experts in the fields of distribution and agency agreements and have experience in drafting and advising on such agreements operating both within England and Wales, as well as overseas. We can help you make the decision as to whether to appoint a distributor or an agent, including advice on the commercial considerations when selecting a potential distributor or agent, the proposed territory and the implications of appointing a distributor or an agent within a foreign country.
Distribution Agreements
As with any other commercial agreement, it is important to have a well drafted distribution agreement to set out the rights and obligations of the parties in detail. If there is no written agreement, or if the written agreement is not drafted properly, then certain terms may be implied by law which may be contrary in the intention of the parties.
It is also important to appreciate that, at law, distribution agreements contravene competition law by virtue of the restrictions normally undertaken by the parties to them. Under EU and UK competition rules, there is a specific framework for assessment of distribution agreements and provided that the criteria are met, a distribution agreement will benefit from an automatic exemption afforded to such agreements. It is therefore crucial that the agreement is drafted by a solicitor experienced in preparing distribution agreements so that you can, where appropriate, take advantage of the various exemptions available and avoid falling foul of competition law.
The advantages and disadvantages
In order to decide whether to appoint a distributor as opposed to an agent, it is essential that you have some understanding of the perceived advantages and disadvantages of distributorship. The advantages can include:-
- you may be able to pass on a large degree of any risk associated with the products
- a distributor should be highly motivated to sell the products it purchases from you, since it takes on greater risk of failing to sell
- you will not be liable for any acts of the distributor
- it may be more efficient from a tax and administration point of view if you do not need to establish a place of business within the proposed territory
- in the UK, no compensation or indemnity is payable to a distributor on termination of the distribution agreement
The potential disadvantages can include:-
- you will have less control over the activities of the distributor than you would over an agent
- a distribution agreement is more likely to be at risk from competition law problems than an agency agreement
Agency Agreements
As with any other commercial agreement, the primary source of the parties’ rights and obligations is their written agreement. However, the law gives an agent certain rights and imposes on him extensive duties because of the nature of the agency relationship. In addition many agency agreements will now be subject to the Commercial Agents (Council) Directive Regulations 1993. The main impact of these Regulations is to give agents more extensive rights than they would otherwise enjoy, particularly on termination of the relationship.
Where you wish to appoint a person to act as your agent, you should enter into a written agreement to regulate your relationship and to take into account the requirements of the Commercial Agents Regulations and the possible impact of competition law.
The advantages and disadvantages
An agency arrangement may be preferable to a distributorship for the following reasons:-
- by selling through an agent, you can validly retain the freedom to fix resale prices without contravening UK and EU competition law
- generally, fewer competition law issues will arise with agency arrangements and in particular you will be able to restrict the agent’s freedom to choose the customers with whom the agent will deal
The potential disadvantages include:-
- the agent has a right to lump sum payments under the Commercial Agents Regulations on termination of the agency agreement, regardless of any breach of the contract by the agent
- the agent’s actions, whilst acting in its capacity as agent, are attributed to you as principal and any contract made by the agent on your behalf are treated in law as your contracts and are directly enforceable against you
Testimonials
What our clients say.
Got the advice I needed to help me with my business, always available when needed.
Duncan
via ReviewSolicitors
Since dealing with Lanyon Bowdler they have been diligent, efficient and at all times very helpful along with being structured in dealing with matters, fees and clarity on all levels. Thank you.
Michael
via ReviewSolicitors
I was clearly informed of progress step by step. The service you provided was very good.
Peter Weston
Shrewsbury
All work carried out effectively and efficiently.
Hubert Jones
via ReviewSolicitors
Smooth and efficient service from very professional firm.
Tim
via ReviewSolicitors
An excellent service with solicitors that you can talk to and who give you a clear understanding of all necessary legal implications and interpretations.
Eric
via ReviewSolicitors
From start to finish we had excellent service. Friendly, approachable and professional.
Carl Gittins
via ReviewSolicitors
Very clear, concise advice and guidance, easy to understand.
Ian Jamieson
Telford
Good service provided throughout with clear communication throughout with all options explored.
Lee
I can thoroughly recommend the highly professional and supportive service received over the last few months.
Heather
via ReviewSolicitors
Responsive, supportive, approachable, clear and empathetic.
Lisa Thacker
Professional and prompt communication. Supportive and client focused.
Lisa Thacker
Jennifer M Whittall Ltd
Whenever I have had need to contact Lanyon Bowdler I have always received a fast, concise and friendly response.
Lee Mortimer
UK Case Management
Definitely would use Lanyon Bowdler again if I need the use of a solicitor.
Mark Bowkett
via ReviewSolicitors
Smooth and efficient service from very professional firm.
Tim
via ReviewSolicitors
We were particularly impressed with the quality of work, the speed and excellent communication.
Allenby Douglas Ltd
Oswestry
Greatly exceeded my expectations!
Worxinfo Limited
Coventry
Very friendly and approachable. Very good advice
Ivor Brown
via ReviewSolicitors
Great Service; Lanyon Bowdler were excellent from the outset. Straightforward and easy process. I just sat back and waited.
Paul Rowe
via ReviewSolicitors
Everything has been professional, efficient and courteous throughout and we are very pleased, both with the service and with the eventual outcome of our case. Everything was first class and exceeded our expectations. Thank you again for providing such splendid service. It is really appreciated.
Mr N J & Dr S J Browne
Llanfyllin
Contact Lanyon Bowdler’s Agency Agreement Solicitors
Give us a call or complete our online enquiry form, to see how we can help. We have offices in Shrewsbury, Bromyard, Conwy, Hereford, Ludlow, Oswestry and Telford so are able to act for clients all over Shropshire, Herefordshire, Mid and North Wales as well as anywhere you may live in England or Wales.
We don’t just sell time; we sell experience, expertise, know-how and results, and are able to offer a wide range of pricing options which may include fixed fees and service level guarantees.
Our people
Meet the team.
Knowledge
Case studies.
Case Study
Knowledge
Latest knowledge.
Blog
Farm Diversification – Tax Considerations a...
Diversification can lead to new sources of income, and may also be an attractive business project for younger gener...
Podcast
What is Community Resource and How does it Help Communities? – Kate Lawson and Bev Baxter
What the charity does and has done for the last 60 years, including a wide range of support, including wellness events, ...
Podcast
The Process of Disclosure in Personal Injury Claims – Miriam Homer and Amy Burgoyne
They explain their roles, and the process of disclosure, where the parties involved exchange documents in relation to th...
Blog
Travel Time and the National Minimum Wage
The Employment Appeal Tribunal (EAT) has held that time spent by poultry workers travelling from their homes to and...
Blog
My Work Experience 24 – 28 June 2024 ...
From the 24 to the 28 of June, I completed a work experience week at Lanyon Bowdler in Shrewsbury.
Blog
Cliffhanger Abseil Fundraiser: A Garden for...
On 8 June 2024, I took part in the ‘Cliffhanger Abseil’ challenge organised by the League of Friends charity at the...
Blog
Distribution of Tips
The Act will protect workers and also eligible agency workers. It does not apply to the self-employed.
Blog
Farm Disputes
Farms often present a twin dilemma for farm owners when they are contemplating making a will: 1) how to facilitate ...
Blog
Is transferring my house to my children a g...
As private client practitioners, we are asked almost every day by clients about transferring their home into their ...
Case Study
Severn Bridges Multi Academy Trust, Shrewsbury
We would recommend the firm for converting to academy status or changing required legislative documents....
Podcast
Understanding why People Bring Claims Against the NHS and Medical Professionals – Natasha Gibbons and Amy Bills
Natasha and Amy discuss why they do the job they do, how clinical negligence lawyers are misrepresented in the media and...
Blog
The Most Important Law of Our Generation? –...
According to the Labour Force Survey for Great Britain during 2022/23, 561,000 workers were injured in the workplac...
Accreditations
Our awards and accolades.
Contact us
Get in touch.
"*" indicates required fields