Difference between Distribution Agreement and Agency Agreement

Distribution agreements are often used in relatively inexpensive sales transactions such as the sale of software, kitchen appliances or cosmetics. The distributor is usually a large company like Avon or Blackberry, which then gives resellers the right to sell the products in their own stores or to their own customers. These resellers are essentially independent contractors and not official representatives of the distributor, although they must act in accordance with the dealer`s policies. If you need lawyers for a distributor contract or an agency contract, please contact us. We have a lot of experience in design, negotiation and consulting, even if disputes have arisen due to existing contracts of this type. There are different types of distribution agreements such as exclusive rights, exclusive rights, non-exclusive agreements, selective distribution agreements, etc. Exclusive rights agreements are agreements that prevent the supplier from seeking a sale in its territory and ordering other distributors in the same territory. Exclusive rights allow the supplier to seek sales, but do not allow the supplier to engage another dealer in the same territory. Non-exclusive rights are those in which the supplier can designate any number of distributors and seek direct sales in the same territory.

Selective distribution agreements are those in which the supplier appoints distributors according to its own needs. It is important to make it clear whether the relationship between the supplier and the intermediary is an agency or distribution relationship. The lack of distinction between terms can lead to unnecessary litigation. There are different forms of agency contracts and there are more regulations that apply to agents than to distributors. A representative may be authorized to negotiate and conclude contracts on behalf of the procuring entity, or he may be a representative of the procuring entity, but without such power. Any type of agency can be exclusive or non-exclusive. If it is the sale and purchase of goods, it is likely that the agency will be subject to the regulation of the commercial agent. These rules provide for methods of compensation for the representative if the client terminates the relationship.

Garden Products: Our client is the UK`s leading supplier of growing, gardening, wild bird care and pet care products. We have drafted commercial agency contracts for the distribution of all their products across the UK to independent garden centres through agents. We have also been involved in various “litigations” to resolve the issue of compensation payments to various agents in the event of (i) death, (ii) sale of agencies and (iii) resignation, including the sale of agencies and supreme legal actions regarding the quantification of compensation, including European law. This agreement is a document in which the supplier/manufacturer allows traders to deliver goods in order to resell them in a specific location. In such a contract, a joint partnership of two companies is required to distribute the goods. This is done through the supplier`s authorizations or business methods. The trader is exclusively allowed to carry out such activities and make a profit by applying the costs to the goods. No uniform case law on the analogy of civil and commercial law is applicable to the distribution contract, since there are no legal regulations. Mainly for the purpose of distinguishing between the agency contract and the distribution contract, the two are completely different from each other. First, a representative is responsible for assisting the supplier/manufacturer in negotiating and entering into contracts on his or her behalf, but the distributor is responsible for reselling the supplier`s goods exclusively on his or her own terms. Second, an agent is a paid person who, even with a percentage of commission from the supplier and the trader, buys and owns the supplier`s goods, sells them in the market and assumes the risk himself and adds a profit margin to cover and profit from their costs. Now we need to know who an agent is.

An agent is defined in section 182 of the Indian Contract Act 1872. It is an intermediary or intermediary involved in a contract between the main supplier and the main customer. There are two types of agents where the goods are sold, that is, the sales agent who does the sales work and a marketing agent who does the marketing of the goods. The commercial agent is authorized to enter into the contract on behalf of the supplier, and the prescribed contract is also binding on the supplier. Unlike the sales agent, the marketer does not have the authority to bind the supplier, but he can market and support the supplier`s goods and items to potential customers. If there is now a demand or desire of the customer in the market to make a purchase of goods, the supplier concludes the contract. The Indian courts have painted a clear picture of the distinction between non-competent commitments according to the terms and duration of the agreement. The courts will consider whether the agreement is commercially restrictive or not to determine enforceability. In order to improve the level of service to customers and to effectively manage the sale of products and price management, it is necessary to provide for the necessary restrictions in accordance with contract law and competition law. .