Distribution agreement for hardware with software

A device with software in it is sold as goods and licensed as software at the same time, and a distribution agreement has to do both: sell the hardware to the distributor with the implied terms and retention of title that go with goods, license the software down the chain to the end user, allocate the product safety and connectable-product security obligations that attach to whoever places the product on the market, and set the territory, pricing and warranty terms within competition law. I draft that agreement for a fixed fee of £995, delivered in five working days.

Who this is for

Manufacturers and brand owners in England and Wales appointing distributors for devices, equipment or consumer electronics that run embedded firmware or connect to an app or cloud service, and importers and distributors taking on such products.

What matters in a distribution agreement for hardware with software

The sale of goods and the licence of the software

The agreement should sell the hardware to the distributor as goods, with the implied terms of description, quality and fitness under sections 13 and 14 of the Sale of Goods Act 1979 excluded or limited only where reasonable under section 6 of the Unfair Contract Terms Act 1977, and should license the embedded and companion software separately: to the distributor for demonstration and resale only, and to end users under an end user licence the distributor must pass on unaltered, with the software remaining the manufacturer's under the Copyright, Designs and Patents Act 1988. A distributor that thinks it bought the software with the box needs the agreement to say otherwise.

Product safety, security and who places the product on the market

The manufacturer, or the importer where the manufacturer is outside the UK, is responsible for conformity of the product with the General Product Safety Regulations 2005 and the sector rules that apply, such as the Electrical Equipment (Safety) Regulations 2016 and the Radio Equipment Regulations 2017, and for consumer connectable products the security requirements under the Product Security and Telecommunications Infrastructure Act 2022 apply to manufacturers, importers and distributors alike. The agreement should allocate those obligations, require the distributor to keep records, act on recalls and safety notices, and not modify or relabel products, and require the manufacturer to provide the documentation and the security update statement the distributor must have.

Territory, pricing and competition law

The agreement should appoint the distributor for a defined territory and channel, exclusive or not, with the manufacturer's reserved rights, and should set the price the distributor pays and leave resale prices to the distributor: fixed or minimum resale prices are prohibited under the Competition Act 1998, and restrictions on sales outside the territory must fit the Competition Act 1998 (Vertical Agreements Block Exemption) Order 2022. Minimum purchase commitments, forecasts and the consequences of shortfall should be stated, and the distributor buys and sells in its own name so the Commercial Agents (Council Directive) Regulations 1993 do not apply.

Warranty, returns and support

The agreement should give the distributor a warranty on the hardware for a stated period with repair, replacement or credit as the remedy, a returns process with authorisation, the manufacturer's obligation to honour the end user warranty it publishes, the distributor's obligations to consumers under the Consumer Rights Act 2015 where it sells to them, and the support arrangements for the software: firmware updates, the companion app and cloud service, and the support period the manufacturer commits to. Where the software service is withdrawn, the agreement should say what the distributor may tell customers and what stock can still be sold.

Retention of title, payment and credit

Title to the hardware should remain with the manufacturer until paid for, under a clause section 19 of the Sale of Goods Act 1979 permits, confined to the goods and allowing resale in the ordinary course, with the distributor storing goods identifiably and insuring them; payment terms, credit limits, interest under the Late Payment of Commercial Debts (Interest) Act 1998, and the manufacturer's right to suspend deliveries for non-payment should be stated, with delivery terms and the passing of risk expressed by Incoterm or plain words.

Term, termination, stock and the boilerplate

The agreement should run for an initial term with renewal, terminate for breach, insolvency and change of control, and provide on termination for the manufacturer's option to buy back stock, the distributor's right to sell remaining stock for a period, the end of the marks licence granted under section 28 of the Trade Marks Act 1994, the continuation of end user warranties and software support, and the return of technical information. Export controls under the Export Control Order 2008 should be addressed where the product or its software is controlled, liability capped under section 11 of the Unfair Contract Terms Act 1977, and third-party rights excluded under the Contracts (Rights of Third Parties) Act 1999.

What it costs

Reseller or partner agreement, £995. Channel, referral or white label arrangements. Five working days.

Buying online forms the engagement on payment. The scope is what the saas and technology contracts page describes, you accept the Terms of Service at checkout, and I email you within four working hours to get started. If you would rather ask something first, email me.

What you get

• A bespoke contract drafted for how your product is sold, delivered and supported
• Service levels you can meet, with remedies that are proportionate rather than aspirational
• A liability position that is defensible and will survive enterprise procurement
• IP and data provisions that fit together rather than contradicting each other
• A commercial note on where you will get pushback and what is worth conceding
• One round of amendments

What is not included

• Negotiating individual enterprise deals, which I quote separately
• Advice on the law of jurisdictions outside England and Wales
• Technical security certification or audit
• Regulatory advice for regulated sectors such as financial services or health

Questions I am often asked

Who is responsible if the product turns out to be unsafe?

The manufacturer, or the importer for products made outside the UK, for conformity and recall; the distributor for acting on recalls and not modifying the product. The agreement allocates the obligations and the cost of a recall between them.

Can we stop the distributor selling online outside its territory?

You can restrict active selling into territories reserved to others within the block exemption, but not passive sales in response to unsolicited orders, and not online sales generally. The agreement is drafted within those rules.

The distributor has not paid and holds a warehouse of our devices. Can we take them back?

If the agreement retains title until payment and the goods are identifiable, yes, with a right of entry the agreement gives. Software licences for those devices end with the goods.

Related guidance and services

• SaaS and technology contracts, £995, the service this page describes
• Contract review, £495
• Data protection agreements and privacy terms, £795
• Getting an AI-drafted distribution agreement checked
• Terms for a connected device with an app

This page is general guidance for businesses in England and Wales, not advice on your own circumstances. Last reviewed: September 2026. Email geoffrey@caesar.co.uk.