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The nature of distribution

Distribution is an arrangement under which the distributor buys goods from a manufacturer and resells them on its own behalf. By contrast, in an agency agreement the agent does not buy the goods but arranges sales for the manufacturer. For a summary of the differences between agency and distribution, see Practice Note: Agency and distribution compared.

Distribution is commonly used where a manufacturer needs help in bringing products to a particular market; for example, in an overseas territory with which the manufacturer is not sufficiently familiar or connected, or where the nature of the products does not require direct contact with the customer. Distribution arrangements may be entered into by wholesalers of products, who are intermediaries selling to other distributors rather than directly to end users. For convenience, this Practice Note will refer to 'manufacturer',