Agency and distribution arrangements: The whats, whys and wherefores (Part 2)

In our previous article (see part 1 here), we considered:

• why a business might use an agent or distributor;
• the difference between an agent and a distributor in the UK;
• the pros and cons of using an agent and distributor in the UK; and
• the different types of agency/distributor arrangements in the UK.

It is worth noting that the labels “agent” and “distributor” are sometimes used interchangeably and can mean different things to different people. It is important to expressly state in any agreement what rights the agent or distributor is to have because their legal position differs in relation to the manufacturer or supplier (principal).

Key provisions/considerations when drafting

In addition to considering appropriate warranties, indemnities, limitations on liability and dispute resolution (see our articles on the former two here and here), what follows are key considerations when appointing an agent or distributor in the UK.

Comment
Appointing an agent or distributor in the UK involves careful consideration of a number of factors. These include understanding the scope of authority, defining the territory and customer base, setting performance criteria, and ensuring compliance with laws and policies. It’s also important to draft clear terms for product supply, price and payment, and to establish procedures for handling product liability and termination of the agreement. Remember, the choice between an agent and a distributor depends on your business needs and the specific market conditions. Always seek professional advice to ensure your agreements align with the latest legal requirements and best practices.

Contact our Corporate & Commercial team if you would like advice on agency and distribution arrangements.

[1]In general, these are key legal and commercial considerations when appointing an agent or distributor in the UK. The article does not attempt to address all the key terms of an agreement for the appointment of a UK-based distributor or agent.

[2]Commercial Agents (Council Directive) Regulations 1993 (SI 1993/3053) (Commercial Agents Regulations).