Simple Guides

What is the difference between a distributor and an agent?

In a distributorship a supplier or manufacturer sells his products to the distributor, who in turn sells the products on to his customers, adding a margin to cover his own costs. Distributorships are used as a low risk means of expanding business into new markets or territories.

The distributor assumes liability for the products incurring a greater degree of risk than an agent in the course of his business. The distributor has no authority to create a contract between the supplier and customer. The customer’s contract will be with the distributor.

A Sales Agent is a self-employed intermediary who has continuing authority to negotiate the sale of goods on behalf of another person “the principal” (or to negotiate and conclude the sale of goods on behalf of and in the name of that principal).