Distribution Agreement

This is a useful tool that identifies each party’s rights and obligations under the agreement with the option of giving exclusive or non-exclusive rights to the distributor.

Important considerations

Since the agreement may involve dealings with international markets, the document should be customised to incorporate the requirements of each party with the awareness that there is no uniform regulations or law around the world.

This document should only be used for the appointment of a distributor, as it excludes the creation of agency or partnership relationships. Therefore, it is important to be aware of the difference between distribution and agency. 

Difference between distribution and agency

Agency involves a person called ‘agent’, who usually acts as a representative of the supplied goods. Agents do not take ownership of your goods and are generally paid a commission based on the sales generated. Therefore, the supplier as the principal has more control over the way the agents operate, for example settling on the sale price.

Distribution, on the other hand, involves a ‘distributor’, who buys the products and resells them in their own right for their own profit.