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Distribution Agreement

A distribution agreement governs the relationship between a supplier (or importer) and an independent reseller who buys goods for resale in a defined market. This template is drafted under English law and reflects the UK's post-Brexit competition regime, in particular the retained Vertical Block Exemption and the Competition Act 1998. It covers exclusivity, territory, minimum purchase commitments, trade mark licensing, competition-law-compliant sales restrictions, and run-off arrangements on termination.

When do you need this?

Typical use cases

  • You are a UK supplier appointing a distributor in the UK, Ireland or wider EMEA
  • You are an importer bringing a foreign brand into the UK market
  • You are formalising an existing supplier-reseller arrangement
  • You are a retail chain agreeing an exclusive distribution deal on a brand
What the contract includes

The contract covers

Identification of supplier and distributor with company numbers
Definition of Products and Territory
Exclusive or non-exclusive appointment
Resale-as-principal characterisation (contrast with agency)
Minimum annual purchase commitment with conversion or termination remedy
Pricing at supplier list prices with distributor discount
Payment terms with late payment interest under the 1998 Act
Trade mark licence for the duration of the appointment
Competition law compliance clause (passive sales, resale price freedom)
Initial term followed by rolling notice period
Immediate termination for material breach and insolvency
Post-termination run-off of stock
Confidentiality of pricing and commercial terms
Governing law and jurisdiction — England and Wales

Legal basis

This template is drafted under the laws of England and Wales. It reflects the UK Vertical Agreements Block Exemption Order 2022 (retained after Brexit) and the Competition Act 1998 (Chapter I prohibition on anti-competitive agreements). Key limits: exclusive distribution is generally lawful below 30% market share; restrictions on passive sales are hardcore restrictions and void; resale price maintenance is likewise unlawful. The Late Payment of Commercial Debts (Interest) Act 1998 applies automatically to B2B invoices.

Questions about distribution agreement

Frequently asked questions

What is the difference between a distributor and an agent?
A distributor buys goods from the supplier and resells them in its own name — it takes title, bears stock risk, and sets its own margin above the supplier's price. An agent introduces sales to the supplier without buying the goods, and is paid by commission. Distribution is generally freer to structure commercially; agency is heavily regulated by the Commercial Agents (Council Directive) Regulations 1993 (including compulsory compensation or indemnity on termination).
Can I grant exclusivity across the whole UK?
Yes, subject to competition law. Exclusive distribution is a permitted vertical restraint under the UK Vertical Block Exemption where neither party exceeds 30% market share in the relevant market. Above that threshold, exclusivity requires individual assessment. What is not permitted (even below the threshold) is banning the distributor from making passive sales — responding to unsolicited orders from customers outside the exclusive territory.
What happens if the distributor misses the minimum purchase target?
Failure to hit the minimum commitment is typically material breach. Under this template, the supplier can either convert an exclusive appointment to non-exclusive (opening the territory to other resellers) or terminate outright. In practice, a cure period of 60–90 days is often given first — a distributor with genuine market difficulty may need time to adjust rather than lose the appointment outright.
Can I control the resale prices the distributor charges?
No — resale price maintenance (RPM) is a hardcore restriction of competition and is prohibited under Chapter I of the Competition Act 1998 (and Article 101 TFEU where trade between EU and UK is affected). You may publish a recommended resale price but may not enforce a minimum or fixed price. Discount schemes, promotional rebates and category pricing must be structured carefully to avoid effectively imposing RPM.

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