Distributorship Overview

The relationship between manufacturers and suppliers with their distributors is very different from a sales agency. 

A distributor pays for and takes ownership of the goods that are to be sold, rather than leaving ownership with the supplier, as in an agency relationship. 

In general, distributors will also bear the risk of loss or damage of the goods after they have paid for them. 

Event marketing companies are in a similar position to goods distributors, in as much as they take the lead position in putting on a show or event on behalf of the sponsors and participants and bear the risk of its success.

Distributors will bear the costs of selling the goods and will have to judge their price in order to make a profit. In contrast, agents are rewarded by a commission that is based on the sales price that will be agreed with or even set by the principal.

Read what Net Lawman says is included in typical distribution agreements and in their legal templates:

"Agreements to suit many types of distribution arrangement

A “distribution agreement” could cover a wide range of possible marketing arrangements. These documents cover many angles. We include many options to cover the elements of your deal that are important to you, and allow you to add any industry-related terms or special compliance you want the other side to follow.

These agreements can be used for any business selling goods of any type at home or abroad.

Favourable to one party, acceptable to both

The first point you should consider is who is setting the terms.

Each document has been drawn to favour one particular party. However, it will not help your long term relationship if you ride rough shod over your business partner. So every document takes some account of what the other side will want.

Generally, it is the producer or owner who sets the terms of what he wants from the distributor, but this can change as the distributor becomes more powerful. Our consignment and distribution agreement has been drawn for a large, modern distributor whose marketing strength and reach justifies terms of which a smaller distributor can only dream.

A final contract or a basis for negotiation of heads of terms

Whether you are the distributor or the merchant, there will be many areas where you would like the other of you to do things your way. As a result there will be a lot to negotiate. By setting everything down in a document like one of these, before you start to talk, you have a head start and the agenda is yours.

Each of these is a comprehensive agreement, but as always with Net Lawman documents, you can reduce it easily to the exact terms you need.

Relevant law in these documents

The law relating to these agreements is largely common law, not statute law. That means you have great freedom to make your own deal.

If the distributor operates outside of the UK, there may be additional local laws with which he must comply. This document assumes that the distributor will take responsibility for all aspects of compliance with local law, whether relating to the product, the customer, importation or duties and taxes.

Particular terms covered

The documents provided by Net Lawman include the following terms:

• setting up the agreement
• obligations of each party
• compliance and regulation
• product recall
• minimum sale requirements
• distributor's marketing obligations
• distributor's liaison and reports
• the price, orders and acceptance
• delivery and transportation
• payment terms, including payment on running credit account and payment by letter of credit
• risk and retention of title
• products defective or not as ordered
• warranty and service policy
• disclaimers and limitation of liability
• mutual indemnities
• assignment and change of control of business
• confidential information
• intellectual property
• duration and termination
• warranties by one or both sides
• liaison arrangements - is there a single source of communication the parties can rely on?
• consignment stock management - if appropriate
• compliance and regulation
• fees for additional services
• stock loss and damage
• specially agreed promotions and marketing arrangements
• stock records"

Detailed guidance notes are provided with each template. Net Lawman offers a money back guarantee if the document is not what you need, as well as a legal review option if you want some professional assistance when you are drawing up your documents.

Notice:

The documents menus are designed to describe the documents, but please be sure that you check them over carefully to ensure that they do meet your needs. All documents are subject to Net Lawman's Terms and Conditions, which we ask you to read before you purchase any documents.

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• promote the sale of online legal and business document templates;
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