Free Agency Distribution Agreement Template

COMMERCIAL AGENCY AGREEMENT

England And Wales  ·  Exclusive Commercial Agent  ·  24 Months

This commercial agency agreement (this "Agreement") is made as of 1 April 2026 between Northfield Manufacturing Ltd (company number 09876543) of Unit 7, Crown Business Park, Leeds, LS1 4PL (the "Principal") and Meridian Sales Group Ltd (company number 12345678) of 14 Harbour Way, Bristol, BS1 6QH (the "Commercial Agent"). The parties acknowledge that the Commercial Agents (Council Directive) Regulations 1993 (SI 1993/3053, as retained in UK domestic law) apply to this Agreement and confer mandatory rights on the Agent that cannot be derogated from to the Agent's detriment before the Agreement comes to an end (reg 19).

The Principal appoints the Commercial Agent as its exclusive commercial agent for the negotiation of, and (where authorised) the conclusion of, contracts for the sale of the Products in the Territory on behalf of and in the name of the Principal, within the meaning of regulation 2(1) of the Commercial Agents Regulations 1993. The Commercial Agent accepts the appointment on the terms of this Agreement.

Territory: England and Wales.

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.

Products: All industrial cleaning products manufactured by the Principal under the 'CleanPro' brand, including surface cleaners, degreasers, sanitisers and floor-care products, together with related consumables and accessories listed in Schedule 1..

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.

This Agreement commences on 1 April 2026 and shall continue for an initial term of 24 months, unless terminated earlier in accordance with this Agreement. On expiry of the initial term, this Agreement shall automatically renew for successive 12-month periods unless either party gives written notice of non-renewal at least 3 months before the end of the then-current term.

Commission: The Principal shall pay the Agent commission at the rate of 12% of the net invoice value (excluding VAT, credits and returns) of all transactions concluded with customers in the Territory during the term, in accordance with regulations 6 to 12 of the Commercial Agents Regulations 1993. Commission accrues under reg 10(1) as soon as the Principal has executed the transaction, the Principal should have executed the transaction, or the third party has executed the transaction; and becomes payable no later than the last day of the month following the quarter in which it became due (reg 10(3), cannot be derogated from to the Agent's detriment).

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 £40 / £70 / £100 by debt size). The parties acknowledge the UK Government's late-payment reform package announced on 24 March 2026 (expected in force late 2026 / early 2027), which will cap payment terms imposed by a large Principal on a smaller Agent at 60 days (reducing to 45 days), render the 8% statutory interest mandatory and incapable of contractual exclusion, deem invoices accepted if not disputed within 30 days, and confer enforcement powers on the Small Business Commissioner; to the extent any term of this Agreement becomes inconsistent with that statutory regime, the statutory regime shall prevail.

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.

The Commercial Agent shall:
• 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.

The Principal shall:
• 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.

Commercial Agent additional obligations:
• 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.

The Commercial Agent may appoint sub-agents or sub-distributors with the prior written consent of the Principal, such consent not to be unreasonably withheld or delayed, and provided that any sub-appointment is on terms consistent with this Agreement. The Principal may refuse consent on reasonable commercial, reputational or compliance grounds (including Bribery Act 2010 due diligence).

During the term of this Agreement, the Commercial Agent shall not manufacture, sell, distribute or promote any products or services that directly compete with the Products without the prior written consent of the Principal. This reflects the Agent's duty of good faith under regulation 3 of the 1993 Regulations.

The Agent shall attend at least four (4) industry trade fairs per calendar year within the Territory, maintain a dedicated product page on its website, and distribute updated product catalogues to all active and prospective customers on a quarterly basis.

Notice: Either party may terminate this Agreement (after any initial fixed term) by giving not less than 3 months' prior written notice to the other. Notice shall not be less than the minimum periods prescribed by regulation 15 of the Commercial Agents Regulations 1993: one month in the first year of the contract, two months in the second, and three months in the third and subsequent years; and the end of the notice period shall coincide with the end of a calendar month unless otherwise agreed.

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.

On termination of this Agreement (including expiry, resignation by the Agent for the Principal's default, or death of an individual agent), the Agent shall be entitled to compensation under regulation 17(6)-(7) of the Commercial Agents Regulations 1993 for the damage suffered as a result of the termination, including loss of commission which proper performance of the agency contract would have procured and loss of the goodwill of the agency. Compensation is assessed on the open-market value of the agency as at the date of termination, applying the principles in Lonsdale v Howard and Hallam Ltd [2007] UKHL 32.

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).

For a period of 12 months following termination of this Agreement, the Commercial Agent shall not, without the prior written consent of the Principal:
• 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.

Each party shall keep confidential all information of a confidential nature (including trade secrets within the meaning of the Trade Secrets (Enforcement, etc.) Regulations 2018, customer lists, pricing, business plans and technical data) disclosed by the other party in connection with this Agreement. This obligation shall survive termination and continue for a further two (2) years, or in perpetuity for trade secrets while they retain that status.

Where either party processes personal data in connection with this Agreement, it shall comply with the UK GDPR and the Data Protection Act 2018 as amended by the Data (Use and Access) Act 2025 (Commencement No. 6 Regulations SI 2026/82, in force 5 February 2026). 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. Any international transfer of customer or commercial personal data (for example, in cross-border distribution arrangements) shall be made only in accordance with Chapter V UK GDPR and shall be assessed by reference to the "data protection test" introduced by Schedule 7 of the DUA Act 2025 (whether the recipient regime is materially lower than the UK standard, replacing the previous "essentially equivalent" test).

Where the Commercial Agent uses artificial-intelligence or automated profiling tools (CRM lead scoring, automated qualification, AI-based market segmentation, automated price optimisation or similar) to process customer or prospect personal data, the Commercial Agent shall comply with the automated decision-making and profiling regime under Articles 22 to 22D UK GDPR as reformed by section 80 of the Data (Use and Access) Act 2025 (in force 5 February 2026 under SI 2026/82). The Commercial Agent shall ensure that any "significant decision" (such as denial of credit terms, refusal of supply, or denial of a discounted rate) based solely or predominantly on automated processing carries (i) information about the logic, (ii) the right to make representations, (iii) the right to obtain human intervention, and (iv) the right to contest the decision. The Commercial Agent shall not use customer personal data to train, fine-tune or otherwise improve any AI / ML model offered to third parties without the Principal's prior written consent.

Each party shall comply with the Bribery Act 2010 (including having adequate procedures under s.7(2)), the Modern Slavery Act 2015 (including, where applicable, s.54 transparency requirements) and all applicable sanctions regimes, anti-money-laundering and counter-terrorist-financing laws. Breach of this clause is a material breach entitling the other party to terminate with immediate effect.

Each party that is a UK-registered company, limited liability partnership, registered overseas entity or other body registered or required to be registered at Companies House warrants that: (a) each of its directors, members (in the case of an LLP) and registrable Persons with Significant Control ("PSCs") has had their identity verified with Companies House (whether directly or via an Authorised Corporate Service Provider) under sections 1110A to 1110F of the Companies Act 2006 as inserted by section 62 of the Economic Crime and Corporate Transparency Act 2023; (b) the identity verification regime commenced on 18 November 2025 (voluntary phase from 8 April 2025) and the 12-month transition for existing directors and PSCs concludes in mid-November 2026; (c) the signatory executing this Agreement on its behalf has the authority to do so and, where required by law, has personally completed identity verification under the above regime. A material misstatement (i) is a material breach of this Agreement, (ii) may constitute an offence under section 1112 Companies Act 2006 and (iii) may amount to a "relevant offence" for the purposes of section 199 ECCTA 2023.

Each party warrants that, where it constitutes a "large organisation" within the meaning of section 199 of the Economic Crime and Corporate Transparency Act 2023 (meeting at least two of: ≥250 employees, >£36m turnover, >£18m balance sheet), it maintains reasonable fraud-prevention procedures as required by that section (in force 1 September 2025) and that neither it nor, to its knowledge, any "associated person" within the meaning of s.199 has committed a "relevant offence" in connection with this Agreement or the Products. The Commercial Agent acknowledges that, in performing this Agreement, it (and any sub-agents / sub-distributors) may be an "associated person" of the Principal for the purposes of s.199 ECCTA 2023, and shall not procure any sale or distribution by means of false representations, dishonest concealment of material facts or other "relevant offence". The parties shall promptly notify each other of any actual or suspected fraud connected with the Products, commissionable transactions or invoices.

This Agreement and any dispute or claim arising out of or in connection with it or its subject matter (including non-contractual disputes or claims) shall be governed by and construed in accordance with the law of England and Wales. Each party irrevocably agrees that the courts of England and Wales shall have exclusive jurisdiction to settle any dispute or claim, save that either party may seek urgent injunctive relief in any court of competent jurisdiction.

Entire agreement: This Agreement constitutes the entire agreement between the parties and supersedes all prior representations, warranties or agreements relating to its subject matter.

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.

IN WITNESS WHEREOF, the parties have executed this Agreement as of the date indicated.