A commercial agent is entitled to enter into agreements with the customer on behalf of the supplier. The contractor may therefore bind the supplier to a contractual agreement. Unfortunately, this happens often. A thorough and well-written distribution agreement is important. It can protect your good relationship and avoid misunderstandings and costly disputes. It can take you away from the court. The question of the threshold should be whether the agreement will be structured as a transaction between the procuring entities or whether the distributor will be a representative of the supplier. This is often overlooked. There is a real “agency” if the trader never actually buys the goods from the supplier, but receives a commission for the search for buyers – the sales contract exists between the supplier and the final consumer. The agent is just a channel. 30 years ago, the Commission`s agencies were much more frequent than they are today and, rightly, it is difficult to define the scope of the agency and a contracting authority is responsible (by proxy) for the acts and omissions of its agents.
The message here, don`t use the words “agency” or “agent”, unless that`s exactly what you mean! An agent and a distributor have different contractual agreements with a manufacturer. An agent is an intermediary between the manufacturer and its customers and binds the manufacturer to contracts with customers and third parties. An agent markets products or services on behalf of the manufacturer as part of the agent`s authority under the distribution agreement. A distributor is an independent third-party company that buys products from the manufacturer and resells them at an additional price. The distributor does not bind the manufacturer to contracts with third parties and any loss of turnover suffered by the distributor does not affect the profits of the producers. The agency distribution contract defines the agent`s remuneration as a result of the manufacturer`s sales that fall within the agent`s distribution area. Commissions may vary depending on the volume and value of sales transactions. An agency distribution contract creates a fiduciary relationship between the agent and the manufacturer, which allows the agent to create legal relationships between the manufacturer and its customers. The agency distribution agreement defines the conditions of the agent`s power in the market and defines the sales area and sets limits on the selling prices. The agent is entitled to act on behalf of the manufacturer during the term of the contract and all rights to renew the contract are included in the agreement. The next time you start negotiating a distribution agreement, there will be a lot of other issues, but at least consider the above….