An agent will represent the supplier when seeking, negotiating and concluding contracts with the ultimate purchaser of the goods. Even where the ultimate purchaser deals principally (or even exclusively) with the agent, the contract created will be between the supplier and the ultimate purchaser. The laws regarding agency differs from general contract law and you need to specialist advice when entering into such arrangements to ensure you do not fall foul of the Commercial Agents Regulations.
A distributor will buy the goods from the supplier and then re-sell them at profit to the distributor’s own customers, there will be two contracts: one created between the supplier and the distributor; and a second between the distributor and the ultimate purchaser. Therefore, the end customers are the customers of the distributor, not the supplier. You need to consider carefully the nature of the arrangements to ensure you and not in breach of both EU and UK competition law.
A franchisee is a legally and financially separate business which is typically granted a licence by a franchisor to use the franchisors barding and operational modal to set up a similar independent business. Franchises provide a franchisor with faster access to distribution infrastructure and a lower cost than self sale. However, the downside to the franchisor is a loss of control, financial support to franchisee may cut into profit element, and the franchisor needs to divulge know-how and business information. For the franchisee it’s often a cheaper way to start a business with an established brand, access to finance is often easier than starting from scratch and the risk of failure is reduced. The downside for a franchisee is that the franchisee has less control than an independent business, royalties and/or mark ups may be payable on sales made and there are possible restrictions on ability to sell or restructure the business.
All three of these structures require careful consideration and we strongly recommend you seek specialist advice. Our commercial solicitors will provide you with the expert advice you need to expand your business and will discuss your commercial objectives with you to understand your priorities, advise, both in legal and practical terms, on the merits of appointing of each option and assist with implementing the necessary contractual arrangements to establish the appropriate relationship.
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Limitation of liability, confidentiality, force majeure, protection of intellectual property, indemnities, and warranties, dealing with a dispute between the contracting parties and termination.
No, it does not. In fact, you could have entered a contract accidentally and be liable for a term that you didn’t think you were liable for, e.g. verbally or via an email exchange.
Courts will generally not interfere with a contract agreed between two commercial parties (who are not consumers) except in very limited circumstances, e.g. if one party is left with no remedy following the other party’s breach of contract.
White there can be overlaps between the two roles, essentially, a distributor buys the products from a manufacturer to market and sell them in a particular country or region. The distributor takes on the responsibility of insuring the products and dealing with customer after-sales queries.
An agent will negotiate and possibly also execute contracts on behalf of the manufacturer in return for a commission but will not be responsible for the insurance or quality of the goods being sold. There can be overlaps where, for example, an agent may decide to test a new market and buy some goods from the manufacturer to sell them in a different country or region. The key point is whether the customer contracts with the manufacturer (agency) or directly with the person selling them the goods (distribution).
It is not always necessary to trade on the basis of bespoke commercial agreements. If you sell goods or services to consumers or to other businesses where the contract is not intended to be negotiable, it is important to have appropriate standard terms and conditions (STCs).
Standard terms and conditions (STCs) are often given a low priority, but they will always be of critical importance. With expert drafting, STCs provide a favourable legal framework for all repeatable transactions, especially those with consumers. They avoid the need for legal advice in most situations and save you money over time.
In drafting standard terms and conditions (STCs), we pay particular attention to what are usually the most important issues, for example:
Ensure you ask your legal advisor to review the contract together with the other party’s terms and conditions before you sign the contract incorporating those terms and conditions.
You may also wish to have your own standard terms and conditions (STCs) reviewed to ensure they are legally compliant and suitable for your business needs before sending them to the other party with whom you intend to sign a contract.
Although the benefits of using STCs are substantial, their use is subject to certain legal and practical limitations. STCs require regular review to ensure that they take account of legislative or regulatory changes or new case law. They must also reflect changes in the business activities of your company, particularly if you change the products and services that you offer.
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