Both an agent and a distributor have the same economic function, i.e. the organization and promotion of sales of products of the principals. However, there is a basic difference in their position. The agent promotes sales on behalf of the principal and receives a commission on the sale as compensation. The distributor purchases the products from the principal, resells them and makes a profit on the difference between the purchase price and the reselling price. An agent differs from all other clients due to the special terms that bind him/her to the principal and to sales regulations.
Italian law does not contain specific provisions governing the position of a distributor. However, there is a tendency to consider distributorship agreements as falling under the provisions regulating supply contracts (article 1559 of the Civil Code), i.e. contracts whereby a party undertakes, in exchange for a consideration, to supply goods regularly or periodically to another. However, because of their particular characteristics, distribution agreements are only to be partially covered by rules governing supplies, and should be considered on a case-by-case basis taking into account the terms and conditions of each individual agreement and the general rules covering contracts and obligations.
The position of the distributor is characterized by a higher risk than that of the agent, as he/she must sustain a client's failure to pay. On the other hand, the distributor enjoys better control of the market and greater independence.
The choice to be made between appointing an agent or a distributor will be dictated by a series of factors concerning the kind of product to be dealt with, whether a deposit is necessary, whether the principal thinks he/she must have direct control over the market, and the need for a facility to provide direct assistance to clients.
The table below indicates the main differences.
Both an agent and a distributor have the same economic function, i.e. the organization and promotion of sales of products of the principals. However, there is a basic difference in their position. The agent promotes sales on behalf of the principal and receives a commission on the sale as compensation. The distributor purchases the products from the principal, resells them and makes a profit on the difference between the purchase price and the reselling price. An agent differs from all other clients due to the special terms that bind him/her to the principal and to sales regulations.Italian law does not contain specific provisions governing the position of a distributor. However, there is a tendency to consider distributorship agreements as falling under the provisions regulating supply contracts (article 1559 of the Civil Code), i.e. contracts whereby a party undertakes, in exchange for a consideration, to supply goods regularly or periodically to another. However, because of their particular characteristics, distribution agreements are only to be partially covered by rules governing supplies, and should be considered on a case-by-case basis taking into account the terms and conditions of each individual agreement and the general rules covering contracts and obligations.The position of the distributor is characterized by a higher risk than that of the agent, as he/she must sustain a client's failure to pay. On the other hand, the distributor enjoys better control of the market and greater independence.The choice to be made between appointing an agent or a distributor will be dictated by a series of factors concerning the kind of product to be dealt with, whether a deposit is necessary, whether the principal thinks he/she must have direct control over the market, and the need for a facility to provide direct assistance to clients.The table below indicates the main differences.
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