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Distribution Agreements
Unlike an agent, a distributor (sometimes called a reseller) buys goods in its own right from the supplier and sells them on to customers. The distributor sells goods to the end customer and therefore the customers are those of the distributor and not the supplier. We work with our clients to help establish a sophisticated distribution network so they can get their products to new customers, both in the UK and overseas, in the most cost-effective and efficient routes possible.
Our services include negotiating and drafting legally compliant distribution agreements that can be used to form the foundation of a distribution network and to maximise growth.
The Agreement
When negotiating distribution agreements, suppliers should consider whether they wish to impose any restrictions on distributors including:
- Selling competitor products
- Pricing of the product
- Minimum purchase requirements
Distribution agreements should also consider the exclusivity of the product distribution and whether or not the business can offer the same product to other distributors in the market.
When considering restrictions, suppliers should bear in mind the implications of competition law and whether the restrictions could cause them to be in breach of these rules. Our experts will be able to assist in ensuring that the agreement balances the suppliers requirements without breaching competition law. Our team can advise on the benefits of using exclusive, non-exclusive and sole distribution agreements for your specific situation.
Terms for the longevity of the distribution agreement should also be clearly stated as well as the marketing activities and techniques the distributor can undertake to sell your product. Distributors should ensure that they will be able to comply with all of these terms before committing to the agreement.
Supply Chain
Consideration should be given to the supply chain element of a distributor agreement. For example, you should consider whether there are any terms in the contract that allow you to purchase the goods that should flow down into your contracts. As the customers purchase products directly from the distributor, terms such as liability should be carefully considered and whether consumers or businesses are being supplied.
Competitive Behaviour
When entering into a distribution agreement you should also be aware of UK and (if trading with the EU) EU competition law and anti-competitive behaviour such as cartels. For further information on competition law, please click here.
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