Q&As

Under English law, what is the difference between a 'dealer' and a 'distributor'?

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Published on LexisPSL on 30/03/2017

The following Commercial Q&A provides comprehensive and up to date legal information covering:

  • Under English law, what is the difference between a 'dealer' and a 'distributor'?
  • Can a manufacturer appoint a party under two separate agreements as its dealer and distributor on a non-exclusive contract to sell, market and distribute manufacturer's products within a specified territory? (ie UK)

Under English law, what is the difference between a 'dealer' and a 'distributor'?

Neither ‘distributor’ nor ‘dealer’ are terms which have a specific recognised meaning under English law. The courts will look at the substance of the agreement between the parties to determine the nature of it.

Unlike the terms ‘distributor’ or ‘dealer’, the term ‘agency’ does have a particular meaning under English law, see: Agency—overview. The terms ‘distributor’ and ‘agent’ are commonly compared and contrasted in commercial arrangements, as they offer manufacturers and other principals two distinct methods of taking their goods and services to market via a third party. See also: Distribution—overview.

Distribution has certain features in common with agency, but the underlying legal principles are significantly different. A distributor would purchase products from a manufacturer and sell those products on to customers as an independent principal, applying a mark-up to the manufacturer's sale price in order to make a profit. For this reason a distributor can be referred to as a ‘re-seller’ in some jurisdictions. Title to the products passes to the distributor, and it is the distributor, not the manufacturer, who has the contractual relationship with customers.

By contrast, an agent negotiates and (sometimes) concludes contracts with customers on the principal's behalf and is remunerated by fixed or variable

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