An agency relationship exists when one party (the agent) has the permission of another party (the supplier) to receive orders from a third party (the client) or to establish a legal relationship between the supplier and the client. The difference is that the agent acts in the name of principle, whereas a distributor probably acts on his own behalf, but has a contractual relationship with the principle of buying certain goods and putting them directly on the market with restrictions. Unlike a sales agent, a sales agent does not have the right to bind the supplier, but can market and promote the supplier`s product to potential customers. If a customer wishes to make a purchase, the supplier concludes the contract. Agents are often preferable to high-quality, complex or tailor-made sales. You must also use an agent if you want to sell a service that must be delivered in person. For many British companies, selling abroad involves the use of agents and distributors. It`s important to know the difference between the two and the function that suits your scenario. Unlike agents, distributors purchase products from the supplier and then resell them on their own behalf to customers in a given area, controlling pricing and the resulting profits. It is important to make it clear whether the relationship between the supplier and the intermediary is a distribution agency or company. The lack of a distinction between terms can lead to unnecessary litigation.
The main advantage of a distributor vis-à-vis an agent is financial – the company sells the product or service to the distributor, so that a sale at that time is made in the accounts of the British company. The distributor must then find customers and resell the product or service. An intermediary is an intermediary that you appoint to negotiate and, if necessary, enter into contracts with clients on your behalf, so that you have the contract with the customer. Agents generally receive commissions on sales they make on a percentage basis. It is a legal contract by which an agent (natural or legal person) is legally bound to a First Party on a continuous or stable basis for payment in return. This contract consists exclusively of the execution of commercial transactions or transactions as an independent intermediary, without, unless otherwise agreed, the risk of transactions being assumed. You can negotiate it in the agreement. The agreement could, for example, give you control of the advertising and point of sale used. It may require the distributor to conduct or spend a certain amount of money on certain marketing campaigns. The agreement could also require the distributor to store an adequate stock of your products.
It is the client who has the contract with the final client and usually the agent is not without party.