Of course, the distributor benefits from exclusivity agreements, but there is a compromise on exclusivity, which means that suppliers generally define a kind of minimum performance obligation that the distributor must accept. Failure to comply with these obligations results in fines, a reduced commission rate or a loss of exclusivity rights. The distribution contract defines the terms of the agreement, including the cost of the goods or the commission rate, the duration of the contract during which the distributor can operate and other important details. As stated in the introduction, in addition to general obligations to distribute goods, a distributor may also be required to meet certain marketing obligations in order to support the producer`s penetration efforts. Trade lawyers argue that it is always desirable for an agency agreement to be written, given that it is a contract between two parties and it is essential that both parties be aware of their rights and obligations. In the absence of a clear and written agency agreement, there is a higher risk of commercial litigation. The main laws for agency contracts in the UK are the most important: like all contracts, these agreements should be legally binding and it is important to ensure that they follow the law to ensure their validity, which is why distribution agreements should always be controlled by a lawyer before being signed by one of the parties. Companies can use distribution agreements for multiple purposes. Some use a distributor as a vehicle to bring their products to market. Others appoint a distributor to take advantage of their know-how or to share customer lists and contacts in the market.
The main conditions of a distribution agreement also vary and reflect the requirements and intent of each agreement. A distribution agreement is a legally binding agreement between an entity supplying goods and an agreement that markets goods. In this case, the supplier may be either a manufacturer or another distributor, who resells the products of another supplier. The distributor is a company that plans to market and sell the products, either to the public or to other companies. The EU directive is implemented in slightly different ways at EU level. Although it is not possible to oppose the directive, the parties may agree that the laws of a state other than the United Kingdom are applicable in the EEA. This could mean that the agreement would be subject to another version of the directive.