Distributors buy and sell, while Commercial Agents promote and negotiate the sale of goods on behalf of another person (the Principal) who then sells the goods to customers. The most contentious point in agency contracts is compensation for the Agent upon termination. The customers belong to the Principal. Many jurisdictions have mandatory laws aimed at protecting agents, irrespective of contractual provisions.
Other typical disputes arising from distributorship or agency agreements include:
- Manufacturer/vendor fails to supply the goods to the distributor in conformity with the contract, or at the time provided in the contract;
- Manufacturer/vendor supplies the goods to competitors of distributor/agent where the contract stipulates exclusivity for the distributor/agent;
- Distributor fails to purchase from manufacturer/vendor contractually required quantities, or at the agreed times;
- Distributor/agent distributes or promotes the goods outside of the licensed territory;
- Distributor/agent appoints a sub-distributor/subagent where such appointment is not allowed by the manufacturer/vendor;
- Distributor starts producing products similar to those made by the manufacturer/vendor where such parallel production is not permitted;
- Distributor fails to pay a manufacturer/vendor for products.
Parties may seek various means to resolve such disputes. For certain disputes, it may be sufficient to use an expert to establish the quality of the goods or the number of sales made or organized by the agent.
