In the commercial world, a distributor buys goods from a supplier to sell them on to customers. This may be a simple relationship on the surface but it needs to properly governed.
Oliver & Co Solicitors can draw up a distribution agreement that specifies the terms of this business relationship. There are many different types of distribution agreements for businesses, and we’ll tell you which type of agreement suits your business the best, which usually depends on the scale of the distribution and what type of goods are being sold.
Here are the key features of some types of these agreements:
Exclusive distribution agreement
This agreement is perfect for where distributors can only sell products in a specified geographical area. It can also include particular products or sales channels.
Sole distribution agreement
Often a sole distribution agreement works alongside an exclusive distribution agreement as a supplier may only authorise one distributor of its goods in one area.
Selective distribution agreement
Sometimes a supplier may wish to have control over the sales a distributor makes. In these instances, a selective distribution agreement is needed to ensure competition law isn’t infringed.
Every distribution agreement needs to contain all the relevant terms and conditions that relate to the supply of goods, as well as information about the element of exclusivity, any key performance indicators, marketing, proprietary rights, the duration of the agreement, any restrictions in place, and the notice and termination periods.
You may have oral agreements in place with a supplier or distributor. These tend to let you down once any disputes occur. Relationships in business can sour and verbal agreements are difficult to back up in a court case. The only way to ensure your rights are protected is to have a proper, written distribution agreement in place between the two parties.
