Agency Agreements
Appointing an agent to represent your goods and services in a new territory can be an attractive route to developing a new market. We can advise on the opportunities (and the pitfalls to avoid) for principals and agents entering into agency arrangements.
Principals
We advise principals seeking to establish new agency arrangements, or to expand existing arrangements into new territories, and provide suitable documentation to reflect the details of the model envisaged. We support our clients in negotiating and concluding distribution agreements and can guide them through the process of coordinating local law advice on the contracts performed in foreign legal jurisdictions where required.
Clients often seek our advice on the Commercial Agents Regulations, and how these affect their position as principal – we provide guidance on these issues and support our clients in creating documents that reflect the requirements of the Regulations and mitigate the exposure of the client as principal.
We also commonly advise on issues that arise during the life of the contract and can support contract interpretation, and the preparation of variations and extensions to existing agency agreements.
Agent Distributor Agreement
We advise agents at all stages of their agency. We are frequently instructed by agents looking to enter into new agency agreements and require assistance with drafting an agency contract, or, reviewing and understanding the terms of an agency agreement proposed to them by the principal. We support agents in negotiating and concluding agency agreements and variations to existing agreements.
Our Dispute Resolution team regularly acts for agents who have had their agencies terminated and are seeking an indemnity or compensation payment under the Commercial Agents Regulations. Often difficulties arise during an agency and we are instructed to advise on issues relating to territory or accounts being brought “in-house”. You can read more about the services we provide in respect of disputes arising from agency arrangements.
Agency Agreement FAQs
Here are some questions we frequently get asked by clients, for anything else please feel free to contact us.
What are the main differences between the distribution model and the agency model?
There is scope for a great deal of variety within these two models, but we provide a summary of the main differences between the models as commonly implemented below:
Distribution: A distributor buys products from the supplier, and sells those products to customers in the distributor’s name. This means that, for a distribution arrangement relating to goods, two transfers of legal ownership occur – first from the supplier to the distributor, then from the distributor to their customer.
A distributor sets its selling prices and makes a profit by selling the products at a mark-up to the price it buys them from the supplier.
These aspects of the arrangement are detailed in the Distribution Agreement between the parties, which will also specify commercial details such as the term and territory of the arrangements, and whether the distributor is appointed on an exclusive, sole or non-exclusive basis (see below), and any minimum sales targets, operational arrangements in respect of matters such as forecasting, accounting and reporting, and delivery of goods, as well as setting out the legal terms of the arrangement.
Agency: An agent, by contrast, acts on behalf of the supplier (referred to as the ‘principal’ in this context) in the promotion of the principal’s products, and does not supply the products to customers in its own name. This means that, for an agency arrangement relating to goods, there will be only one actual transfer of legal ownership – direct from the principal to the customer – even if the agent in practice holds stock for onward supply to customers.
The agent generally earns a commission from the principal, often calculated as a percentage of the value of the products which the principal sells through the efforts of the agent. These aspects of the arrangement should be set out in the Agency Agreement between the parties, which will also cover other commercial, operational and legal aspects of the arrangement.
What are the advantages and disadvantages of the distribution model and the agency model?
From the perspective of the supplier choosing between the models, the distribution model can be viewed as achieving a greater transfer of risk from supplier to distributor (since it is the distributor that generally bears the financial risk of the products failing to sell, and the distributor also has direct contractual obligations to its customers). This model also generally reduces the administrative burden for the supplier since the distributor acts as a single point of contact for the supplier in the territory.
Appointing an agent tends to preserve greater control for the supplier (the supplier, as principal, can set pricing, determine how the products are marketed and sold etc), but at a cost in terms of ongoing involvement in respect of the downstream arrangements, since the supplier itself, as principal, will have direct contractual relationships with the customers that buy the products through the agent. The supplier as principal will need to be aware of local law tax and compliance requirements affecting businesses trading in the relevant territory through an agent.
Significantly, the Commercial Agents Regulations (and the EU Directive on which those Regulations are based) apply to agency appointments in respect of goods but do not generally apply to distribution agreements. The objective of the Regulations is, in broad terms, to protect the interests of agents, so the supplier may wish to avoid their application by using the distribution model. However, it should be noted that some countries extend similar rights and protections given to commercial agents under the Commercial Agents Regulations to distributors operating within their borders.
What terminology is used when talking about the different variants of the main models?
Many of the terms commonly used in relation to agency and distribution arrangements are given different meanings by different businesses or in different contexts, so it is always important to check that the contract you are using reflects the parties’ actual intention regarding the arrangements. Commonly used terms are:
Reseller – this is generally used to refer to a business that operates as a distributor (rather than as an agent). In some cases, the terms ‘distributor’ and ‘reseller’ will be used interchangeably, but in other cases, a supplier may distinguish between ‘distributors’ – which it appoints in respect of a specified territory and allows to appoint a further tier of ‘resellers’ in that relevant territory – and ‘resellers’, which will have direct contact with customers.
Value Added Reseller (VAR) – is used in the IT/ Technology sector to describe a business that combines software provided by a third party with its own hardware, software and/or services to provide a ‘value added’ combination for the benefit of its customers. The VAR is permitted by the original licensor of the software (the supplier) to resell the software only in the ‘value added’ combination and cannot grant downstream licences of the software on a standalone basis.
Exclusive/ Sole/ Non-Exclusive Distribution – a distributor or agent appointed on an ‘exclusive’ basis will be the only representative of the relevant products appointed by the supplier in the relevant territory, and the supplier will also commit not to take active steps itself to make sales of the same products in the same territory.
In the case of a ‘sole’ distribution appointment, the supplier will again commit to make the distributor or agent the only representative it appoints in the territory, but there is no commitment from the supplier that it will not itself take active steps to make sales in the same territory.
A ‘non-exclusive’ appointment gives the distributor or agent the right to represent the products in the territory but leaves the supplier free to appoint other third parties to promote the products in the territory and to take active steps to make sales in the same territory.
Marketing Agent/ Sales Agent – terminology used to define the different types of agents that a principal may appoint.
Normally, the term ‘marketing agent’ (or ‘introducer’, ‘introducing agent’) will apply to an agent that is given authority to promote the products, but must refer any interested customers to the principal, and cannot itself enter into contracts on the principal’s behalf.
By contrast, in addition to the rights granted to a ‘marketing agent’, a ‘sales agent' will often be granted authority to conclude contracts with customers, acting on behalf of the principal.
Our Agency Agreement Experience
Myerson is retained as an expert advisor to the members of Agentbase, the Association of Professional Sales Agents and Sales Agents UK.
Recent examples of our work in this area include:
- advising on the preparation of heads of terms for the implementation of an arrangement whereby our client would resell consultancy services provided by a third-party supplier in combination with our client’s existing services;
- preparing a marketing agency agreement, under which our client permits its agent to introduce potential customers for products which the client also makes available direct to customers through its online channel;
- acting for a variety of principals on the preparation and implementation of their agency agreements to appoint agents on a non-exclusive basis for the sale of goods within the UK.
Why Work With Our Commercial Team
- We provide a partner-led service to ensure you receive the best commercial legal advice and support.
- We have a large and proactive commercial team which can meet your deadlines.
- You will receive city-quality commercial legal advice and commercial services at regional prices.
- As part of a full-service commercial law firm, our commercial solicitors work closely with our Dispute Resolution, Employment, and Commercial Property departments to provide our clients with a seamless service.
- We have been ranked as a Top Tier law firm by the Legal 500 for the last seven years and recognised as a Top 200 Law Firm in 2022.
- Our commercial solicitors are easy to deal with and understand that a common-sense approach is often required.
- We give our clients an estimate of the costs involved in undertaking any work at the outset and provide cost updates regularly.
- We understand that each matter is unique to your circumstances and that you need support from a commercial lawyer experienced in dealing with various clients and types of work.
- We are a full-service law firm operating from a one-site office, which means our teams communicate effectively and efficiently.
- Our commercial team use the latest technology to ensure that we are working as efficiently as possible and that geographical distance does not prevent us from providing excellent legal advice and client service.
Testimonials
Julie L
Richard and Olivia were great to work with from start to finish. They took time to understand our industry, and how we worked as a company. This, mixed with their professional knowledge, allowed the process to be seamless, and produce specific documents for our business. I would highly recommend the team, and I am pleased that I have built this relationship so that if any services are required going forward, I will be able to contact them knowing I will receive a high level of service.
Nick
We had an outstanding experience with Myerson Solicitors. From start to finish, the team was professional, efficient, and approachable. Our solicitor, Olivia Whittaker, was particularly remarkable - her attention to detail, clear communication, and expert guidance made the entire process smooth and worry-free. We couldn’t be happier with the outcome and highly recommend Olivia and the firm to any business seeking expert commercial legal advice.
Richard
We needed to rewrite our online terms and conditions to ensure compliance with all legal aspects. Olivia and Richard were outstanding in their advice and assistance. They guided us through every step of the process, providing valuable insight and expertise. Their professionalism and clear communication made a complex task manageable, and we couldn't be happier with the service they provided.
Andrew
I engaged Richard Meehan, Myerson Solicitors, for the drafting of a complex multi-product exclusive supply agreement. He was thorough, explained in plain English and kept me updated consistently throughout. In addition, his after service communications were excellent, ensuring that we felt supported in our negotiations. Great service, before, during and after, which is the benchmark that I have come to expect from all my dealings with Myerson Solicitors. A great team.
Adrian
Richard and the team at Myerson were excellent. They guided me through a relatively complex legal situation and weren't afraid to admit when they needed to bring in other divisors to offer the best guidance which I appreciated. It was all done efficiently and for a fair price. A great experience.
Mo
I recently worked with Richard to draft an international supply agreement, and I couldn't be happier with the service I received. He was highly knowledgeable, easy to work with, and always responded promptly to any questions I had. I felt well-supported from start to finish and would highly recommend Richard to anyone looking for a reliable and experienced solicitor for commercial contracts.
Ben
Exceptional service, Richard and his colleagues were professional and personable not like other law firms we have worked with in the past. It was clear from the outset that Myerson were very down to earth and willing to put in the work to help us achieve our goals. They were a delight to work with on our contract negotiations. I would highly recommend them.
Aceplan Player Development Ltd
I worked with Richard Meehan and Olivia Whittaker, who helped me to build a comprehensive set of legal documents for my software business. This included terms and conditions for the different user types, privacy and cookie policies, and general website terms. Their legal knowledge and what was required for my business was very impressive. It left me feeling reassured and confident in the work they prepared. All the deadlines were met and I'm really satisfied with the end product.
Torram Ltd
I couldn't recommend Myerson Solicitors highly enough. Richard and Olivia were fantastic to work with, they were extremely professional and knowledgeable and knew how to get the best out of my contract. They were very responsive and ready to answer all of my questions whenever I asked them. They are a safe pair of hands for anyone starting out in business and don't have any personal recommendations for solicitors. They're very capable and very pleasant to work with and compared to other companies, fairly priced.
Peter
Myerson deserves more than 5 stars. I am exceptionally pleased with the work done by Richard M at Myerson who worked on the Terms for my startup. Incredible depth of knowledge and amazing turnaround time. Highly recommended!
Matt
As a start-up company, we needed specific advice, work and contracts drafting on key contracts. (Customer and Supplier) along with specific website and cookie policies. Myerson's completed this work on time and to a high standard. Importantly, they advised on which areas to focus on to spend time and money - very important for a start up. Every member of the team was very capable and if they did hand over, the person handover to was always fully briefed and up to speed with our account and work. Highly recommended.
Jason
We needed a flexible VAR agreement for our AI based software offering that could be easily adapted to a wide variety of partnerships, engagement models and go-to-market strategies. The Commercial team did a great job making sense of our sometimes confused and over-complicated requirements, and simplified it down to exactly what we needed. Soon after we successfully used the agreement with a large multi-national corporation. All in all a great result and a great experience.
Joe
Very pleased with the service received in updating T&Cs and other legal documents. Excellent communication and useful discussions, getting to understand our business and its requirements.
Emad Salib
The team were highly responsive, clear in their advice, and demonstrated a strong commercial understanding of our business and the sector we operate in. They provided practical, well-structured guidance and were proactive in highlighting potential risks while offering sensible solutions. It was a pleasure working with them, and we would not hesitate to recommend Myerson.
Steve Ridd
Rich Meehan at Myerson provided clear, pragmatic and highly effective support on a range of complex commercial matters. His advice was responsive, commercially focused and instrumental in helping us manage risk while progressing key initiatives. Richard worked collaboratively with the executive team, translating legal complexity into practical guidance, and I would have no hesitation in recommending him and Myerson for trusted commercial legal support.
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0161 941 4000
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