Reviewing a distribution agreement from a manufacturer

A distribution agreement makes the distributor the manufacturer's customer and its sales channel at the same time: it buys the products, resells them in its own name, carries the stock and the customer relationships, and depends on a supply it does not control. The agreement covers the brand, the pricing and the manufacturer's freedom to change channel. I review the agreement from the distributor's side and return it marked up with a written explanation of the changes and which ones a manufacturer will accept, for a fixed fee of £495 in three working days.

Who this is for

Distributors, wholesalers and importers in England and Wales that have been sent a distribution agreement by a UK or overseas manufacturer, for consumer products, industrial goods, components, food or drink, and want to know what they are committing to before they invest in stock and territory. The manufacturer and the distributor are businesses; consumer law matters only for what the distributor's own customers can claim.

What to look for in a distribution agreement

Exclusivity, territory and the manufacturer's freedom to sell direct

The agreement should say whether the appointment is exclusive, sole or non-exclusive, define the territory and the channels, and state what the manufacturer may not do: appoint another distributor, sell direct to the distributor's customers, or sell online into the territory. Under the Competition Act 1998 (Vertical Agreements Block Exemption) Order 2022 an exclusive distribution agreement can restrict active sales into another distributor's territory but not passive sales, so the review checks that any restriction on the distributor's own sales outside the territory is limited to active selling and that online sales are not banned.

Resale pricing, minimum purchases and forecasts

A manufacturer may recommend resale prices and may set the price at which it sells to the distributor; it may not fix the distributor's resale price or a minimum, which is resale price maintenance and breaches section 2 of the Competition Act 1998. The review checks any pricing, discount or minimum advertised price term against that rule. Minimum purchase obligations and binding forecasts decide the distributor's working capital, and the review asks for targets that are reviewable each year, for a missed target to lead to loss of exclusivity before termination, and for a right to return or sell off stock if the manufacturer terminates.

Implied terms, exclusions and the products themselves

The manufacturer's terms will exclude the implied terms as to quality and fitness in section 14 of the Sale of Goods Act 1979 and replace them with a warranty limited to defects notified within a period, with repair or replacement as the only remedy. Against a business buyer that exclusion is valid only if reasonable under section 6 of the Unfair Contract Terms Act 1977, and the review tests it: the distributor resells to customers who can claim against the distributor, so the warranty the distributor receives should match the one it must give downstream, with the manufacturer bearing the cost of recalls, returns and product defects in the distributor's territory.

Product liability and safety

Where the manufacturer is outside the UK, the distributor that imports the products is treated as the producer for the purposes of Part I of the Consumer Protection Act 1987 and carries strict liability for damage caused by a defective product, and it is the producer or distributor with duties under the General Product Safety Regulations 2005. The agreement should indemnify the distributor for claims arising from defects in design or manufacture, require the manufacturer to maintain product liability insurance in the territory, and set out who manages a recall and who pays for it. The review checks that the indemnity is not capped at a figure below the insurance.

Brand, intellectual property and marketing

The distributor will use the manufacturer's trade marks in the territory. Under section 28 of the Trade Marks Act 1994 a licence must be in writing and signed by the proprietor, and the agreement should grant one for the term, for the products, with the distributor's rights against infringers dealt with under section 30. The review checks that goodwill generated in the territory is dealt with fairly, that the distributor's own marketing materials and customer data remain the distributor's, and that the obligation to spend on marketing is proportionate to the exclusivity received.

Termination, stock and the customers you built

Because the distributor buys and resells, the Commercial Agents (Council Directive) Regulations 1993 compensation on termination does not apply to it, and the notice period is the distributor's only protection for the investment in the territory. The review asks for notice that reflects the term and the investment, a right to sell existing stock after termination or to have it bought back at cost, continued supply of spare parts and consumables to existing customers, and no post-termination non-compete wider than the Vertical Agreements Block Exemption Order 2022 permits. The Late Payment of Commercial Debts (Interest) Act 1998 applies to sums due either way.

What it costs

Standard review, £495. Marked-up document and a written explanation of the changes. Three working days.

Complex review, £895. Heavily negotiated or unusually complex documents. Five working days.

Buying online forms the engagement on payment. The scope is what the contract review 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

• Your own contract returned with my amendments as tracked changes, plus a clean version with every change accepted, ready to send to the other side
• Comments in the document where a point needs explaining
• A written explanation of what I have changed and why, by email or as an attachment if it is lengthy, marking the points I would hold firm on and the ones that are negotiable
• A view on what is normal market practice and what is the other side pushing their luck
• One round of follow-up questions by email, included

What is not included

• Negotiating directly with the other side, which I quote separately once I know who is on the other side. Where the other side is willing to share a live document, I can work in that document directly
• Drafting a replacement contract from scratch
• Advice on the law of any jurisdiction other than England and Wales
• Tax, accounting or regulatory advice
• Disputes about a contract that is already signed

Questions I am often asked

The manufacturer wants us to commit to minimum annual purchases. Is that normal?

It is normal for an exclusive appointment, and the point to review is what happens when the minimum is missed. The review asks for the target to be reviewed each year, for a shortfall to lead first to loss of exclusivity rather than termination, and for the manufacturer's own supply failures to count against the shortfall.

Are we liable if a product we distribute injures someone?

If the manufacturer is outside the UK and you import the products, you are treated as the producer under the Consumer Protection Act 1987 and carry strict liability. The review asks for an indemnity from the manufacturer for design and manufacturing defects, backed by product liability insurance covering the territory.

Can we sell to customers outside our territory?

The agreement can stop you actively marketing into a territory reserved to another distributor, but under the Vertical Agreements Block Exemption Order 2022 it cannot stop you responding to unsolicited orders from outside your territory or selling online. The review marks up any clause that goes further.

Related guidance and services

• Contract review, £495, the service this page describes
• Terms and conditions drafting, £995
• Reviewing a supplier agreement from a large customer
• Reviewing a reseller agreement from a US software vendor

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.