How to review a distribution agreement under UK law

A distributor buys products from a supplier and resells them on its own account, usually in a defined territory. Under UK law the line between a distributor and a commercial agent, and the competition law limits on territory and pricing, shape what the agreement can say. This checklist covers the main clauses and how to review a distribution agreement in Word with LexDraft.

Last checked: 18 October 2026. The law changes; check the current position before relying on this page.

This guide covers the law of England and Wales. Scotland and Northern Ireland have their own rules on several of the points below.

Distributor or agent?

A distributor takes title to the goods and makes its own margin. A commercial agent negotiates sales on the principal's behalf and earns commission. The Commercial Agents (Council Directive) Regulations 1993, with their compensation or indemnity on termination, apply to agents, not to distributors who buy and resell on their own account. If the arrangement is really an agency, see our agency agreement guide.

Competition law

• The Chapter I prohibition. Agreements that restrict competition can breach the Competition Act 1998. Most distribution agreements rely on a block exemption for safe harbour.
• VABEO. The Competition Act 1998 (Vertical Agreements Block Exemption) Order 2022 came into force on 1 June 2022 and ceases to have effect on 1 June 2028. It generally applies only where the supplier's and the buyer's market shares each do not exceed 30%.
• Hardcore restrictions. The exemption is lost if the agreement contains a hardcore restriction, including fixed or minimum resale prices (maximum and recommended prices are allowed), certain territory and customer restrictions outside the listed exceptions, and wide retail parity obligations.
• CMA guidance. The Competition and Markets Authority has published guidance on the Order. Check it, and the current text of the Order, before relying on the safe harbour.

Clause checklist

• Appointment. Products, territory and customer groups, and whether the appointment is exclusive, sole or non-exclusive.
• Sales restrictions. Limits on active selling into other territories or customer groups, and whether any limit on passive or online sales could be a hardcore restriction.
• Pricing. Supply prices, price changes and any resale price recommendations. Avoid wording that fixes or sets a floor on the distributor's resale prices.
• Minimum purchases. Minimum purchase targets and the consequence of missing them: loss of exclusivity, termination or nothing.
• Orders and supply. Ordering process, forecasts, lead times, delivery terms, risk and title, and retention of title.
• Non-compete. Restrictions on selling competing products during and after the term. Under the Order, a non-compete obligation that is indefinite or lasts more than five years falls outside the exemption, and tacitly renewing obligations beyond five years count as indefinite.
• Trade marks and marketing. A licence to use the supplier's marks, brand guidelines and approval of marketing.
• Product liability and recalls. Warranties, indemnities, recall cooperation and insurance.
• Term and termination. Initial term, renewal, termination for breach or insolvency, and what happens to stock, customer data and marketing materials on exit.
• Liability. Exclusions and caps. Check standard terms against the reasonableness test in the Unfair Contract Terms Act 1977.

Review the distribution agreement in Word with LexDraft

1. Open the distribution agreement in Word, open LexDraft from the Home tab and set the jurisdiction chip to UK: England & Wales (or UK: Scotland or UK: Northern Ireland if that is the governing law).
2. Run the quick checks. They are rule-based and run without AI, catching undefined or unused defined terms, broken cross-references, numbering gaps and inconsistent capitalisation.
3. LexDraft has four built-in playbooks (NDA, SaaS MSA, DPA and services agreement) and no dedicated distribution agreement playbook, so run a general review against English law and use the checklist on this page to direct your own read. This is a general AI review, not a playbook. Findings are graded Critical, High, Medium or Low, and LexDraft flags standard terms that are missing.
4. Accept or reject each proposed redline. Accepted edits land as native Word tracked changes, ready for the other side.
5. Ask the Assistant to explain a clause in plain English or suggest wording for your side. Answers use UK spelling.
6. Look up any case you want to rely on in the Case law tab, then open the judgment on Find Case Law and read it yourself. UK judgments in LexDraft come from The National Archives' Find Case Law service, which only partially represents the activities of the courts and tribunals. Not every judgment or decision is included. Find Case Law does not include judgments from Scottish or Northern Irish courts or tribunals.

LexDraft does not give legal advice and does not summarise judgments. AI output can be wrong, so qualified counsel must check every redline before it goes out.

Common mistakes

• Labelling a buy-resell distributor an "agent", or the reverse. The substance, not the label, decides which rules apply.
• A blanket ban on online sales outside the territory, which may be a hardcore restriction.
• "Territory" defined in a schedule that is never attached. The cross-reference check catches this.

This guide is general information, not legal advice. LexDraft does not give legal advice; qualified counsel must review every draft. LexDraft is not affiliated with or endorsed by The National Archives or any court. Spotted something out of date? Email support@lexdraft.ai and we will fix it.