UK Business Information / Getting to Market

Usually an overseas company will have already decided whether to get to market via an independent distributor, an agent or a direct sales force.

Sometimes existing arrangements with an existing distributor or agent have to be brought to an end to make way for the new UK company.  It is important that care is given to this as:

• it is common for a distributor with no formal agreement or set period of appointment or notice to claim compensation if notice given is too short; and

• EU regulations about termination of agency agreements give agents rights to compensation for termination in many circumstances.

Creation of new distributorship or agency arrangements is normally dealt with between the parties’ lawyers and terms recorded in a formal agreement.

In the case of direct sales, standard terms of sale are commonly used by sellers to set out the key terms of the supply. These are:

• the price, time for payment and accrual of interest and time when ownership passes; and

• limits on liability for defects.

The terms are usually drawn up by lawyers or taken from standard industry terms provided by  trade associations. The UK does not have the same litigation culture as exists, for instance in the US, but it is important that legal provisions governing sales, either direct or through an agent or intermediary, are aligned with the seller’s public, product and other liability insurance cover.

This guidance is intended to provide certain information which may be of interest to an overseas company wishing to set up in the UK.  It is not intended to be a full and comprehensive guide, nor to provide any specific legal advice and it does not discuss the special rules or regulatory requirements which apply to certain special types of companies in the UK.  Professional advice should always be sought in relation to any specific situation.

Copyright SGH Martineau LLP

July 2010