Free Agency Distribution Agreement Template
Define the commercial relationship between a principal and an agent or distributor with a professionally drafted agreement. Cover territory, commission structure, exclusivity terms, and termination provisions under English law.
Basis of appointment: This appointment is on an exclusive basis. The Principal shall not appoint any other agent or distributor in the Territory and shall not itself actively solicit customers in the Territory during the term of this Agreement.
The Principal may, from time to time and on reasonable written notice, add to, discontinue or modify Products. The Principal grants the Commercial Agent a non-exclusive, non-transferable, royalty-free licence to use the Principal's trade marks, logos and brand identity solely in connection with the promotion and negotiation of the Products in the Territory, in accordance with the Principal's brand guidelines and the Trade Marks Act 1994. No other rights in the Principal's intellectual property are granted.
Payment: Commission shall be calculated and paid monthly, by BACS transfer within 30 days of the commission statement. The Principal shall, in accordance with regulation 12, supply the Agent with a statement of commission due, setting out the main components used in calculating it. The Agent is entitled to demand all information, in particular an extract from the books, available to the Principal in order to check the amount of commission due (reg 12(2)).
Interest: Late payment of commission shall attract interest under sections 5A and 6 of the Late Payment of Commercial Debts (Interest) Act 1998 (8% above BoE base rate + fixed sum compensation).
Pricing: Prices shall be set by the Principal from time to time on its price list, and notified to the Agent at least 30 days before any change.
Performance targets: Minimum annual net sales of £500,000 from the Territory and acquisition of at least 25 new customer accounts per calendar year, measured quarterly.
• act dutifully and in good faith in the performance of its obligations (regulation 3(1))
• make proper efforts to negotiate and, where authorised, conclude contracts for the sale of the Products (reg 3(2)(a))
• communicate to the Principal all necessary information available to the Agent (reg 3(2)(b))
• comply with reasonable instructions given by the Principal (reg 3(2)(c))
• account to the Principal for all monies received on behalf of the Principal and hold them on trust
• not accept any commission, rebate or other benefit from third parties in connection with transactions except with the Principal's written consent
• comply with all applicable laws including the Bribery Act 2010, the Modern Slavery Act 2015, the UK GDPR and all applicable sanctions regimes.
• act dutifully and in good faith in its dealings with the Agent (regulation 4(1))
• provide the Agent with necessary documentation relating to the Products (reg 4(2)(a))
• obtain for the Agent the information necessary for the performance of the agency contract (reg 4(2)(b))
• inform the Agent within a reasonable period when it anticipates the volume of transactions will be significantly lower than the Agent could normally have expected (reg 4(2)(b))
• inform the Agent within a reasonable period of its acceptance, refusal or non-execution of any transaction procured by the Agent (reg 4(3))
• pay commission in accordance with the Agreement and the Regulations.
• use reasonable endeavours to promote and develop sales of the Products in the Territory
• comply with all reasonable instructions and policies issued by the Principal from time to time
• maintain accurate and complete records of all sales activities, customer contacts, and market intelligence for a minimum of six (6) years
• provide the Principal with written sales reports on a monthly basis
• attend product training sessions arranged by the Principal at the Principal's reasonable expense
Principal additional obligations:
• supply the Commercial Agent with marketing materials, product samples, and promotional literature in reasonable quantities at no charge
• provide complete and up-to-date product information, specifications and technical data
• notify the Commercial Agent promptly of the acceptance or rejection of orders (and in the case of an Agent, in accordance with regulation 4(3))
• provide product training to the Commercial Agent's sales personnel at the Principal's expense.
Immediate termination: Either party may terminate this Agreement with immediate effect by written notice if:
(a) the other party commits a material breach of this Agreement which, where remediable, remains unremedied 30 days after written notice;
(b) the other party becomes insolvent within the meaning of the Insolvency Act 1986, enters administration, has a receiver appointed, or is subject to a winding-up petition;
(c) there is a change of control of the other party (as defined in section 1124 of the Corporation Tax Act 2010);
(d) the Commercial Agent persistently fails to meet the minimum performance targets set out in this Agreement;
(e) there is serious misconduct, fraud or dishonesty by the other party;
(f) the other party commits a material breach of applicable law (including the Bribery Act 2010, UK GDPR, sanctions or modern slavery legislation).
Immediate termination for the Agent's breach does not deprive the Agent of any accrued commission (reg 8) or, where applicable, of the indemnity / compensation under reg 17.
The Agent must notify the Principal of the intention to pursue the entitlement within one year of termination (regulation 17(9)), failing which the right is lost. Payment is not due where the exceptions in regulation 18 apply (default by the Agent justifying immediate termination; termination initiated by the Agent other than for the Principal's default, retirement at pension age, or incapacity; assignment with the Principal's consent).
• solicit or accept orders from any customer with whom the Commercial Agent had material dealings in the 12 months prior to termination in respect of products competing with the Products; or
• act as agent, distributor or reseller for any competitor of the Principal in respect of competing products within the Territory.
This restraint of trade is intended to comply with regulation 20 of the Commercial Agents Regulations 1993: it is confined to the geographical area or group of customers and the geographical area entrusted to the Agent and to the kind of goods covered, and does not extend beyond two years after termination. Any excess shall be void only to that extent.
Where either party processes personal data in connection with this Agreement, it shall comply with the UK GDPR and the Data Protection Act 2018. If either party is a processor on behalf of the other, the parties shall enter into an Article 28 processing agreement before any such processing begins.
Variation: No variation shall be effective unless in writing and signed by authorised representatives of both parties.
Waiver: No failure or delay in exercising any right is a waiver of it.
Severability: If any provision is held invalid or unenforceable, it shall be modified to the minimum extent necessary or severed; the remainder shall continue in force.
Third-party rights: No person who is not a party shall have any right under the Contracts (Rights of Third Parties) Act 1999 to enforce any term.
Notices: Notices shall be in writing and delivered by hand, recorded post or email to the addresses set out above, and shall be deemed received in accordance with Part 6 of the Civil Procedure Rules.
What Is an Agency Distribution Agreement?
An agency distribution agreement is a commercial contract that sets out the terms under which one party (the agent or distributor) is authorised to market, sell, or distribute products or services on behalf of another party (the principal) within a defined territory. The agreement establishes the rights and obligations of both parties, including commission rates, performance targets, and reporting requirements.
In England and Wales, agency agreements involving the sale of goods on behalf of a principal are governed by the Commercial Agents (Council Directive) Regulations 1993, which implement EU Directive 86/653. These regulations provide agents with important protections, including the right to compensation or an indemnity upon termination of the agreement.
Whether you are appointing an agent to represent your brand in a new UK market or formalising an existing distribution arrangement, a well-drafted agreement protects both British parties by clearly defining the scope of authority, payment terms, intellectual property usage, and the circumstances under which the relationship may be ended in England and Wales.
What's Covered in This Template
This agency distribution agreement template covers all the key provisions needed for a robust principal-agent or principal-distributor relationship under English law.
Party Details
Full legal names, registered addresses, and company numbers for the principal and agent or distributor.
Appointment and Authority
The scope of the agent's authority, whether sole, exclusive, or non-exclusive, and the products or services covered.
Territory
The geographic area in which the agent or distributor is authorised to operate, including any sub-territory restrictions.
Commission and Payment
Commission rates, calculation method, invoicing schedule, and payment terms including VAT treatment.
Performance Targets
Minimum sales targets, reporting obligations, and consequences of underperformance.
Intellectual Property
Licence to use the principal's trade marks, branding guidelines, and restrictions on IP usage.
Confidentiality
Obligations to protect commercially sensitive information and trade secrets during and after the agreement.
Non-Compete and Restrictive Covenants
Post-termination restrictions on competing activities and solicitation of customers.
Term and Termination
Fixed term or rolling contract provisions, notice periods, and grounds for immediate termination.
Compensation on Termination
Indemnity or compensation provisions in line with the Commercial Agents Regulations 1993.
Liability and Insurance
Limitation of liability, indemnification obligations, and required insurance coverage.
Governing Law and Disputes
English law as the governing law, jurisdiction of the courts, and optional mediation or arbitration provisions.
How to Create an Agency Distribution Agreement
Our template guides you through each section of the agreement so you can produce a comprehensive document tailored to your commercial relationship.
- 1
Identify the Parties and Products
Enter the full legal names and registered addresses of both the principal and the agent or distributor. Specify the products or services covered by the agreement and whether the agent will act in the principal's name or in their own name.
- 2
Define Territory and Exclusivity
Set the geographic territory in which the agent or distributor is authorised to operate. Choose whether the appointment is exclusive, sole, or non-exclusive, and clarify any restrictions on the principal's right to sell directly within the territory.
- 3
Set Commission and Performance Terms
Specify the commission rate, how it is calculated, and when it becomes payable. Include any performance targets or minimum order values, along with the consequences of failing to meet those targets.
- 4
Add Protective Provisions
Include clauses covering confidentiality, intellectual property usage, non-compete obligations, data protection, and insurance requirements. These provisions safeguard both parties' commercial interests.
- 5
Establish Term and Termination
Set the initial term of the agreement and any renewal provisions. Define the notice period required for termination and the grounds for immediate termination. Include compensation or indemnity provisions as required by the Commercial Agents Regulations 1993.
Legal Considerations
Agency and distribution agreements in England and Wales are subject to specific statutory protections and common law principles. Understanding these is essential to drafting an enforceable agreement.
This template is for informational purposes only and does not constitute legal advice. Consult a qualified solicitor for advice specific to your situation.
Reviewed for England & Wales law
Commercial Agents Regulations 1993
Where an agent negotiates or concludes sales of goods on behalf of a principal, the Commercial Agents (Council Directive) Regulations 1993 apply. These regulations grant agents important rights including reasonable notice of termination (minimum one month per year of service up to three years) and the right to either compensation or an indemnity upon termination. These rights cannot be contracted out of to the agent's detriment.
Competition Law
Exclusive distribution and territorial restrictions must comply with UK competition law under the Competition Act 1998. Certain vertical agreements benefit from exemptions, but restrictions such as resale price maintenance or absolute territorial protection may be void and unenforceable. The Competition and Markets Authority provides guidance on vertical agreements.
Data Protection and GDPR
Where either party processes personal data in connection with the agreement, the UK General Data Protection Regulation (UK GDPR) and the Data Protection Act 2018 apply. A data processing clause or separate data processing agreement should be included where the agent handles customer personal data on the principal's behalf.
Execution and Enforceability
While agency agreements do not require a deed, they must satisfy the basic requirements of a valid contract under English law: offer, acceptance, consideration, intention to create legal relations, and certainty of terms. For added evidential weight, consider having the agreement executed as a deed, which also extends the limitation period for breach of contract claims from six to twelve years.
Frequently Asked Questions
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