WLA | World Law Alliance

There is a difference between distributorship and agency contracts.

Distributors buy and sell. 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 including EU member states have mandatory laws aimed to protect agents, irrespective of contractual provisions.

Other typical disputes arising from distributorship or agency agreements include:

  • Manufacturer/vendor fails to supply the goods to 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 manufacturer/vendor for products.


Parties may seek various means to resolve such disputes. For certain disputes, it may be sufficient to use an FICM expert to establish the quality of the goods, or the amount of sales made or organized by the agent. For other disputes, such as that involving contract termination, the case may need to be brought in for an expert determination or one of the resolution processes of FICM.



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