Appointing an independent agent or distributor

Many companies use a resale channel to sell their goods and/or services within or outside Northern Ireland. There are a few important distinctions between an agent and a distributor under Northern Irish law, and regardless of the nominal title used in any agreement, the Northern Irish courts will look at certain criteria in deciding whether a reseller is an agent.

These criteria include:

  • level of risk (in terms of ownership of goods and credit risk) assumed by the reseller;
  • level of control exercised over activities of the reseller; and
  • control of the price and other terms upon which the goods/ services are sold.

The European Union Commercial Agents Directive applies to all self-employed agents that have continuing authority on behalf of the principal and that are based and sell goods in the EU, regardless of the location of the principal. This Directive sets out a number of important obligations for companies using agents to sell goods (it does not apply to the sale of services) in the EU. Notably, the agent has the right to receive compensation in certain circumstances if the agency is terminated. It is not possible to contract-out of the Directive.

Distribution agreements are currently subject to both the EU and UK competition law regimes. If a distribution agreement does not comply with the relevant competition law regime, it may be unenforceable.

It is generally advisable to consult with a specialist solicitor while negotiating, and before finalising, any distribution or agency agreement, and even standard-form agreements should be checked to ensure their enforceability.