Distribution Agreement Vs Sales Agreement

Agents typically operate with a commission relationship that typically involves a percentage or volume of sales made. Distribution agreements operate on the principle that a company gives another company or another individual the right to resell its goods or services, assuming that the reseller meets certain conditions and does not represent the original distributor or the product itself. The distribution agreement does not allow the reseller to display or market the product in a manner it has chosen; Instead, it must sell in accordance with the distribution company`s guidelines. These guidelines could stipulate that the price is limited to a certain point or that the product must be sold with a limited warranty. Suppliers who use channel partners as part of their distribution network can use a one- or two-tier distribution channel. In a single-tier distribution system, the provider develops relationships with channel companies such as VARs, system integrators (SIs), and managed service providers (MSPs) that sell to end customers. In a two-step system, the supplier sells products to an independent distributor who, in turn, supplies products to channel partners who then package solutions for end customers. The two-step model makes dealer agreements necessary to facilitate relationships between distributors and channel partners. Exclusive rights prevent the supplier from actively seeking sales in the territory of agents and from using other representatives or traders in the region. Consequently, judgment 647/5 November 2013 highlights the same differences as the Supreme Court`s judgment of 15 March. The main point is that the differences between the two contracts cannot be resolved by analogy with the Law on Agency Contracts.

The analogy should only be applied if there is a reason for it in these agreements. 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. Agency contracts give agents much more power and responsibility. They are also generally much riskier for the client. Agents may take out and market a good or service on behalf of the contracting authority. You can also conclude distribution agreements and other contracts on behalf of the contracting authority, depending on the precise terms of the agency contract and the nature of the goods or services. This is useful for companies that have a new product or service and want to increase market awareness and turnover in new areas. Distribution contracts are often used in relatively inexpensive sales transactions, such as the sale of software, kitchen equipment or cosmetics.

The distributor is usually a large company like Avon or Blackberry, which offers resellers the right to sell the products in their own stores or to their own customers. These resellers are essentially independent contractors and not official representatives of the distributor, although they must act in accordance with the dealer`s instructions. It is important to understand that sales contracts entered into by agents on behalf of a manufacturer are legally binding on the manufacturer, not on the agent himself. This is due to the fact that the manufacturer has given the agent the power to act on his behalf. If the sales transaction goes wrong, in most cases the manufacturer is liable and is able to be sued or be able to take legal action. . . .