A distribution agreement is a legal agreement between a supplier of goods and a distributor of goods. The supplier may be a manufacturer or a distributor who resells the goods of another. Distribution agreements can be due to both UK competition law and EU competition law, so caution should be exercised when developing them. This briefing note summarizes some of the key considerations to consider when developing a distribution agreement. Exclusive distribution shipping is the case where the supplier designates a distributor as its only (or "unique" distributor in a given territory, but unlike the "exclusive distribution model," the supplier is still able to market the products in question to end consumers as it sees fit. Distribution is often used when a manufacturer needs help to bring products to a particular market; z.B. in an overseas territory with which the manufacturer is not sufficiently familiar or related or where the nature of the products does not require direct contact with the customer. Distribution agreements may be entered into by product wholesalers who are intermediaries who sell to other distributors and not directly to end consumers. For simplicity`s sake, this handy note refers to "manufacturers," but the same points and principles apply when a wholesaler designates a distributor.
Exclusive rights prevent the supplier from actively seeking sales on the territory of agents and from appointing other representatives or distributors in the territory. 4 Cross-delivery between distributors within a selective distribution system Licensed distributors must be able to sell or purchase the goods to other authorized resellers on the network. This means that designated distributors cannot be forced to purchase the goods exclusively from the supplier. However, licensed distributors may be restricted from resale to unauthorized distributors. A supplier must decide, during the distribution review, whether to appoint a representative or distributor. There are many factors to consider in this decision. Distribution is an agreement under which the distributor buys goods from a producer and resells them in its own name. On the other hand, in an agency agreement, the broker does not buy the goods, but arranges the sale for the manufacturer. You will find a summary of the differences between the agency and the distribution at: Agency and distribution in comparison. It is interesting to note that these rules and regulations represent a real risk for suppliers and distributors, but are less problematic for suppliers and agents (but this remains a reflection), because representatives do act in the supplier`s place. The supplier undertakes to sell the contract merchandise only to the distributor with an agreed zone and undertakes not to designate other distributors or to sell the goods directly to other customers in the region. - that the distributor buys a minimum amount of goods from the supplier.
Restrictions on the territory on which the distributor is authorized to sell or to customers to whom the distributor is authorized to sell must be free to choose where and to whom they sell, but "active selling" restrictions are permitted (but only if there is (i) an exclusive agreement, i.e. the territories are reserved exclusively for the supplier or another distributor); and (ii) the supplier is not allowed to limit passive sales). Active distribution means actively reaching out to customers located in the exclusive area or in another distributor`s customer group. For example, through direct advertisements, personal visits or advertisements aimed at the customer group or customers in this area.