Agency and Distribution Contract Dispute Claims

During the recession more and more businesses, in order to save employee time and costs, have been using agents and distributors rather than paying their own staff in the field.  There will usually be a written agreement as to the terms of such agency or distribution agreement, although sometimes this can be based on a verbal agreement. These arrangements, whether written or verbal, have led to more and more disputes often due to different expectations on both sides.  It is important for all parties to be aware of the risks of such agreements and your legal rights should the relationship break down.

If you are involved in a dispute with an agent or a distributor, or you are an agent or distributor who is in conflict with a business, contact JMW Solicitors for legal advice on the best steps to take. You can talk to our team on 0345 872 6666 or fill in our contact form and someone will get back to you soon.

Agent and distributor claims in more detail

In essence, an agent is a representative of a business in the marketplace and is often paid commission for work carried out.  In contrast, a distributor is someone who purchases directly from a business and then seeks to resell directly in the marketplace.

What can go wrong?

An agent can commit a business to contracts with third parties, which is often problematic, not least if:

  •  An agent commits a business to a bad contract; or

  •  A business makes large profits on a contract and then doesn’t pay the required commission to their agent.

In these cases things can get difficult, especially if there is not a clear agreement as to how the arrangement between them is to work.  There needs to be a clear statement as to what is expected from each when work is carried out.

  • Distributors operate with a view to making their own profit on the products they sell.  Often this comes with the expectation of having exclusivity on their sale, at least within a certain geographical area. The extent of this will usually be covered in any agreement, but it is important to be sure you are happy with the arrangement before trading commences as these issues can often result in the breakdown of the relationship if both parties are not clear on the terms from the outset.

  • Intellectual property rights may become an issue depending on the products involved, and what a distributor or agent is doing to promote the sale of products.

Tips for Avoiding Getting into an Agency or Distribution dispute

1.   Agents should be contractually required to operate on an open book basis and to report on relevant activities on a very regular basis.

2.   Unless there is a good business reason, agents should tell customers as early as possible that they are an agent and the extent of their authority.

3.   As soon as anything suspicious is noticed or a mistake is made, the customer should be advised of the agent’s position and the extent of their authority.

4.   If it all goes wrong, agency agreements usually need proper notice to be served and customers need to be told in order to minimise loss.

5.   Before agents or distributors are sacked, businesses need to be aware if and how much compensation will have to be paid.

Talk to our team today

If you are involved in a dispute with an agent or distributor, or you are an agent or distributor and have run into difficulties in your relationship with a business, our solicitors can help you to resolve your situation.

To find out more about our services call us now on 0345 872 6666 or fill in our contact form and someone will get back to you soon.

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