A distribution agreement may be appropriate if you need the help of an intermediary to secure the sale of something that is fairly low-value and standardised and which requires no personal service from you. They are ideal where you do not need to play an active role in the sales and delivery process and where you are happy to let your intermediary decide how they conduct themselves.
A distributor will typically:
- buy products from you for onwards sale to their own customers;
- will become a party to the contracts they conclude (while you will not); and
- assume all rights and responsibilities under those contracts.
A distributor cannot create contractual rights between you and their end customer, which means that you do not need to worry about the possibility of them promising something you cannot deliver. However, difficulties may arise if the proposed agreement between you and your distributor arguably controls the competition in respect of a product in a certain geographic area or market, because that may not be allowed.
It may be that, depending on your circumstances, an agency agreement might be better suited to your needs. This will only become clear by discussing your requirements with a solicitor experienced in agency and distribution agreements who will be able to guide you through the things you need to consider and ensure that a suitable contract is drawn up which embodies not only the terms you have agreed but also any additional terms needed to protect your position, including on termination of the distribution agreement if you decide to bring the arrangement to an end.
The commercial law solicitors at Myers & Co in Stoke-on-Trent, Staffordshire, have a wealth of experience in agency and distribution agreements and would be happy to help you ensure appropriate arrangements are put in place. For further advice, please contact Dermot Callinan, director of business services at Myers & Co Solicitors, on 01782 577000.