Agency and Distribution

Agency and distribution. Sounds familiar, but what is agency precisely? And… what is the difference with distribution? What opportunities and risks are involved in agency or distribution?

We are regularly requested to draw up an agreement for the resale of a product or service, whereby the intended collaboration has characteristics of both agency and distribution. That is possible, but it is of great importance for all parties to set out on which basis each party operates.

Agency

The partner who operates as agent acts as intermediary. When concluding agreements, the agent negotiates with customers on behalf of and at the expense and risk of the client. In exchange for this, the agent receives a payment (commission) from the client. Briefly put, the client enters into an agreement with the customer, but when actually concluding the agreement, he plays a role in the background.

Distribution

With distribution, the partner himself acquires services or products from the client, generally for a price which includes a discount against the market price. The distributor then sells on the services or products to his own customers. The distributor concludes the contract with the client himself, at his own expense and risk.In practice, the distributor is also often called “reseller” or “dealer”. No agreements may be made with the distributor that restrict competition in the market (think, for example, of price agreements and so-called key-bidding restrictions).
We consult daily on which form best suits the intended partnership and help make the proper appraisal. We assess whether the agreements are permitted within the Competition Act and assist in drafting an appropriate agreement.