This module further covers regulations 17-20 of the Commercial Agents Regulations 1993 particularly as they apply to Agency Law.
The following are key terms governing the sale and purchase of the goods:
Dual Nature of the Distributor –Position in the supply chain (co-ordinating upstream and downstream terms)A distributor should be looked at as having a dual nature; their position in the supply chain means that it’s necessary for the distributor to manage both the upstream and downstream terms of supply and we always clients not to place too onerous a level of obligation on its distributor.
Supplier’s customer and Link to the MarketUnder distribution the supplier (who may be the manufacturer of the goods for example) supplies those goods to the distributor (which purchases them in its own right) and in turn sells the goods on to a customer (which may be a wholesaler, retailer or end user of the goods, dependent on how many levels to the supply chain there are).Ultimately, the main difference between agency and distribution is that unlike agents, distributors purchase and resell the goods in their own right.
Nothing in EU law protecting distributors (Brexit)This is one of the reasons why unlike agency, there is little in law to protect distributors as against the principal (or supplier). The legislation surrounding distribution (or vertical agreements more generally) is geared towards protecting the ultimate consumer from anti-competitive practices.
Conflicting Objectives for SupplierMaximise earnings from sales (to Distributor)Enable or encourage Distributor to pursue salese.g. Margins at each stage, who funds promotions?Whilst a business does need to protect itself, the more success that the distributor has, ultimately the more success the principal has and so for a multitude of different reasons, again we cannot underestimate the importance of having a formal written agreement in place with the distributor.
This next section discusses various types of clauses which you might consider implementing within the agreement we discussed in the previous video.
The final course assessment to follow contains a number of questions to provide you with an opportunity to solidify and retain the information from this course.