Distribution Agreement in the UK: Template and Key Clauses (2026)

A distribution agreement in the UK is a contract under which a supplier appoints a distributor to buy its products and resell them, usually in a defined territory. The distributor buys the goods, takes title and risk, and makes its margin on resale. This is different from an agency arrangement, where an agent sells in the supplier's name and earns commission without ever owning the goods. The difference decides what happens on termination, so it is the first thing to get right. This is general information, not legal advice. Competition law and cross border rules are technical, so take advice for exclusive or international arrangements. ## Distributor or agent: the termination point This is the single most important distinction in UK practice. Commercial agents are protected by the Commercial Agents (Council Directive) Regulations 1993, which can give an agent a compensation or indemnity payment when the agreement ends, even where the agent is not at fault. Distributors are not covered by those Regulations. A distributor who buys and resells generally has no statutory right to a termination payment, so its protection comes only from the notice and other terms in the contract. If you draft what is really an agency as a distribution agreement, a court may look at the substance and apply the Regulations anyway. ## Key clauses, clause by clause 1. Parties and products. Name the supplier and distributor, and define the products and any future products covered. 2. Territory and exclusivity. State the territory and whether the distributor is exclusive, sole or non exclusive. Exclusivity is powerful and raises competition law questions, so be deliberate. 3. Appointment and resale. Confirm the distributor buys for resale in its own name and on its own account, taking title and risk. 4. Minimum purchase or targets. Set minimum purchase volumes or sales targets if you want them, and say what happens if they are missed, such as loss of exclusivity. 5. Pricing. The supplier sets its sale price to the distributor. The supplier can usually set a maximum resale price or recommend a price, but fixing a minimum resale price (resale price maintenance) is a serious competition law breach. 6. Orders, delivery, title and risk. Set out ordering, delivery terms, when title and risk pass, and payment terms. 7. Intellectual property and branding. Licence the trade marks for resale and marketing only, and control how the brand is used. 8. Obligations. The distributor's duties on marketing, stock, after sales support and compliance; the supplier's duties on supply and product information. 9. Competition law compliance. Vertical agreements between a supplier and distributor are assessed under the Competition Act 1998 and can benefit from the Vertical Agreements Block Exemption Order 2022, which gives a safe harbour below certain market share thresholds. Avoid hardcore restrictions such as fixing minimum resale prices or absolute bans on passive sales. 10. Term and termination. Set the length and notice. Because the distributor has no statutory termination payment, a fair notice period and sell off rights for remaining stock are the distributor's main protection. 11. Liability, warranties and product. Allocate product liability, warranties and recall responsibilities. 12. Governing law and disputes. Choose the law and courts, and for cross border deals consider where disputes will be heard. ## Common mistakes to avoid - Confusing a distributor with an agent and being surprised by a compensation claim, or missing a claim a distributor was never owed.

• Fixing the distributor's minimum resale price, which breaches competition law.
• Granting wide exclusivity without checking market share against the block exemption.
• No minimum purchase or performance measure, so a passive distributor locks up a territory.
• No sell off period, leaving the distributor with unsellable stock on termination.
• Ignoring product liability and recall responsibility. ## Territory, online sales and parallel imports Spell out exactly what the territory means in a world of online sales. An exclusive distributor will want protection against the supplier or other distributors selling into its area, but competition law limits how far you can block sales. You can usually restrict active selling into another distributor's exclusive territory, but a complete ban on passive sales, where a customer approaches the distributor unprompted, is treated as a hardcore restriction. Online sales are generally treated as passive, so you cannot simply forbid a distributor from selling through its website to customers in another area. Set these boundaries with care and take advice, because getting them wrong can make the clause, or the whole agreement, unenforceable and can expose both sides to competition law penalties. ## Keeping distribution relationships governed A supplier with distributors across several territories has to track different terms, exclusivity, targets, renewal dates and competition law exposure for each. The ongoing work is knowing which agreement says what, when each renews or can be ended, and whether targets are being met. Across spreadsheets and email, that oversight slips, and a missed renewal or an unnoticed competition issue is costly. Adira is an AI workspace, built on Claude, where you can draft a distribution agreement from a tuned template, review it for risk such as a resale price clause, sign it electronically, and track territories, targets and renewal dates in one place, with public per seat pricing and a 7 day trial. It is India first and global capable, and a command centre view of your distribution network is on its roadmap. The essential point is independent of any tool: know whether you have a distributor or an agent, respect competition law on pricing, and give fair notice.