Yes there is.

What is a Resellers Agreement?

A Resellers Agreement is an agreement between two parties – someone supplying goods i.e. the Wholesaler, and another selling them to a third party or general public i.e. the Reseller. Under a Resellers Agreement, the Reseller agrees to handle the sales, marketing, distribution and leasing of products agreed between the parties. In other words, the Reseller sells on behalf on the Wholesaler.

Resellers Agreements will typically explain the precise nature of the contractual/commercial relationship between the two parties by defining the scope of the relationship, i.e. what is and isn’t covered under the Agreement is explicitly defined to eliminate any doubt as to the rights and responsibilities of the Reseller and the Wholesaler.

If you are looking to draft or enter into a Resellers Agreement, you should consult with a commercial solicitor to ensure that the rights and responsibilities of each party are clearly set out within the document.

What is an Agency Agreement?

An Agency Agreement is an agreement between someone who requires a service i.e. the Principal, and someone who is willing to provide such a service i.e. the Agent. This could be, for example, a business looking for sales agents to source customers, or a business requiring agents to recruit workers.

As with Resellers Agreements, the Agency Agreement should clearly define the relationship and set out the rights and responsibilities of each party.

The key difference

The main distinction between a Resellers Agreement and an Agency Agreement is that a Reseller is not permitted to enter contracts on behalf of a Wholesaler, whereas one of the primary functions of an Agent is to do just that: enter into agreements on behalf of the Principal.

If there is any dispute as to the true nature of the relationship, the Courts will look to the substance of the relationship, as opposed to the form in which it is created.

A court may disregard the terms of a particular agreement that attempts to define the relationship if it believes the relationship to be different in substance. For this reason, it is crucial that you seek legal advice from a commercial solicitor when entering into a commercial relationship.

The main problem

If an Agent contracts with a Third Party, the Principal, whether they like it or not, will be bound by the actions of the Agent (provided the Agent has not stepped outside the defined scope of their authority). If the Principal cannot fulfil its contractual obligations, it may be liable to pay damages to the third party and/or be required to perform the duties of the contract. For a more detailed explanation of the various remedies for breach of contract, you should look to speak with an experienced commercial solicitor.

On the other hand, a Wholesaler is generally not contractually bound by the actions of the Reseller. The Wholesaler simply supplies the products, and the Reseller enters into its own agreement with third parties. However, if the relationship of the parties comes into question, and it is held by a court that the relationship is actually a Principal-Agent relationship, as opposed to one of Wholesaler-Reseller, the Wholesaler may be bound by the contracts that the Reseller enters into.

Conclusion

Many legal documents may appear similar and some have certain overlaps with others. It can be very difficult for someone without the necessary legal knowledge to determine the differences and understand the consequences of different legal relationships.

If you are unsure of your obligations under a contract you’ve entered into, or require any assistance with drafting a commercial contract, you should speak to a LegalVision commercial solicitor.

Ask Priscilla a Question

If you would like further information on any of the topics mentioned in this article, please get in touch using the form on this page.