SELLING OVERSEAS AGENTS AND DISTRIBUTORS

1
Legal aspects of managing agents and distributors
Presented by Jim Carter
2
Introduction

• Agent or Distributor ?
• Agent and Distributor
• The price of failure
• Using a contract to manage risk

3
Agent or Distributor ?

• Control of Goods
• Control of prices and terms of sale
• Control of customer base
• Financial control

4
Agent or Distributor ?

• Performance monitoring - distributors
• sales performance
• customer service
• financial status/control
• technical competence
• intellectual property protection

• Performance monitoring - agents
• Volume/quality of orders
• Location and identity of customers

5
Agent or Distributor ?

• Nature of the goods
• Territory
• The people
• The costs of establishing a market share
• The legal issues!

6
Agent and Distributor

• Territory
• Term
• Products
• Exclusive/sole or neither?

• Competing product lines
• Targets?
• Payment terms

7
Agent and Distributor

• Law, jurisdiction language
• enforcement issues
• Trademark and other intellectual property
  infringements
• Confidentiality
• Legal support

8
The price of failure - agents

• Under-performance
• maximum pain, limited remedies
• no withholding commission
• Compensation on termination
• overriding right
• Restrictions on post-termination activity
• enforceability and cost

9
The price of failure - distributors

• Under-performance
• Reviewing prices/ orders/performance
• Price control/ monitoring

• Trademarks
• Controlling stock on termination
• Compensation ?
• Post termination competition

10
Managing risk by contract

• Agents and distributors
• effective performance monitoring
• rights to vary territory
• rights to remove customers/markets
• rights to change status to non-exclusive
• rights to remove products/range
• rights to withhold new product
• maintaining technical standards
• orderly transition

11
Conclusion

• Negotiate your terms fully
• Put the agreement in writing
• Avoid uncertainty- deal with all points
• Contacts