Agreements for the Supply Chain

The manufacturer who needs to get their goods to an end user will consider the possible partners for their supply chain. These partners can be Distributors, Agents, Buyers or Resellers. We look at each role in the supply chain.

supply chain roles

Each of these roles have a different purpose and responsibilities, and can occur at any point in the supply chain.

This table provides a comparative overview of four common types of agreements: Reseller Agreement, Product Supply Agreement, Agency Agreement, and Distributor Agreement. Each agreement serves a unique purpose within the supply chain, involving different roles, ownership rights, payment terms, pricing control, territorial considerations, and marketing responsibilities. By examining these features, you can make an informed decision on which agreement best suits your specific requirements.

Feature	Reseller Agreement	Product Supply Agreement	Agency Agreement	Distributor Agreement
Role	Buys and resells products	Supplies products to a buyer	Promotes/sells on behalf of supplier	Buys and resells, often with exclusive rights
Ownership	Reseller owns the products	Supplier retains ownership until delivery	Supplier retains ownership	Distributor owns the products
Payment	Reseller pays supplier	Buyer pays supplier	Agent earns commission	Distributor pays supplier
Control Over Price	Reseller sets resale price	Supplier and buyer negotiate price	Supplier sets price	Distributor sets resale price
Territory	Often non-exclusive	Defined in agreement	Often exclusive to territory	Often exclusive to territory
Marketing	Reseller responsible	Buyer may handle marketing	Supplier often provides support	Distributor may handle marketing

The Distributor.

The role of a distributor generally involves the storage and purchasing of product from the manufacturer or supplier. Product is then on-sold to other wholesalers or resellers. Usually, the distributor’s scope is narrower than that of a reseller, as they will specialise in a particular industry or market.

Sometimes described as a wholesaler, a distributor is similar to that of an agent who creates a relationship between the manufacturer and resellers (sometimes known as a retailer) in the distribution channel.

The relationship between the manufacturer and the distributor is often one of exclusivity, meaning no other organisation is authorised to market or sell the product within a certain territory or industry. Consequently retailers and or resellers can only source the product from the distributor.

Unlike resellers, Distributors will often need to reach and maintain certain sales or order targets in order to retain their distributor status.

Distributors can also provide additional after-sales services such as warranty servicing and repairs, as well as marketing or branding services.

Depending upon the arrangements the distributor has with its retail network it may or may not sell directly to the end user.

Distributor Agreement Template

Our Distribution Agreement Template is used when a manufacturer or supplier of a product wishes to develop a distribution network. The Distribution agreement documents the agreement reached between the parties where the distribution rights granted are either non-exclusive or on an exclusive basis within a specific geographical area.

The Agent

The agent is hired to find customers for, and sell the products or services of a ‘principal’ party. The Sales agent is appointed and empowered to facilitate or negotiate a transaction on behalf of the principal in return for a commission.

The agents role may be exclusive or non-exclusive and they may or may not have a specific geographical territory. Agents do not hold stock.

Sales Agency Agreement Template

Use our Sales Agency Agreement whenever you hire a ‘Sales agent’ to find customers for the products or services of a ‘principal’ party. The Sales agent is appointed to facilitate or negotiate a transaction on behalf of the principal in return for a commission.

This package includes an exclusive agency agreement and a non-exclusive agency agreement.

The Reseller

Similar to distributors, resellers may purchase from the manufacturer directly or through a distributor at ‘wholesale’ prices and on sell to the consumer at a higher ‘retail price’.

Resellers find buyers for your product, either at a wholesale level or to the end-user or consumer. Resellers create value by leveraging sales channels and effectively act as a ‘middle-man’, handling the sales, marketing and supporting the product in the marketplace.

The term reseller is quite broad and is sometimes used to mean someone anywhere in the supply chain either at a wholesale or retail level.

Reseller Agreement Template

Our Reseller Agreement is used when a product supplier is looking to develop a retail network. The reseller may be a wholesaler, or a retailer who ultimately sells the product to the end user.

Under the terms set out in the agreement the Reseller accepts the appointment as a non-exclusive reseller, to market and promote the sale of the Products it purchases from Supplier. Under no circumstances is the reseller to act or purport to be an agent of the supplier.

A solid Reseller agreement can protect your business by defining the relationship with your distribution network and shielding you from potential liability.

The Buyer

In this context, we use the term Buyer as referred to in a Product Supply Agreement.

This agreement outlines the terms under which a supplier provides products to a buyer. This could be for raw materials, components, or finished goods.

Key Features of a Product Supply Agreement

- Details specifications, quantity, delivery schedules, and quality standards of the products supplied.
- Includes clauses on inspection, acceptance, and rejection of goods.
- Payment terms and conditions are clearly defined, often including penalties for late delivery or non-compliance with standards