A dealer agreement is a contract between a distributor of goods and the company who sells them to the public. Typically, the manufacturer will sell a product to the distributor, the distributor will then sell the product to the dealer, and the dealer will then sell the product to the final consumer.

Application for small business people

Many small businesses operate in the field of selling goods and services to the public. Unless they are dealing directly with the manufacturer of a product, then they will generally source the products they sell from a distributor. In these situations, the terms and conditions of the relationship between the small business and the distributor are set out in the dealer agreement.

Most manufacturers and distributors are very concerned with maintaining the profile of their brand and the quality of their products. They may require the dealer to abide by certain conditions before it will be granted the right to sell a particular product. These requirements may include having the product displayed in a specific way, having a set pricing structure and running certain promotions. The dealer is often referred to as an “authorised dealer” to emphasise that the manufacturing company approves of that small business as a representative to sell the product.

6 key things to consider

Prior to entering into a dealer agreement, it is important that you consider the following issues:

  1. Who are the parties to the agreement?
  2. If you are the dealer, does the agreement restrict you from entering into similar agreements with other distributors?
  3. Are there any other “authorised dealers” of the product in your local area?
  4. Is the dealer required to sell a specific amount of the product within a certain time frame?
  5. What are the distributor’s responsibilities in terms of providing the product, delivery times, and what are the consequences of a breach?
  6. Who is responsible if there is any defect in the quality of the products?

What to do next: If you would like help or more information on dealing with dealer agreements call Joe Kafrouni on (07) 3354 8888 or email or joe@klaw.com.au.


The information provided by Kafrouni Lawyers is intended to provide general information and is not legal advice or a substitute for it. Small business people should always consult their own legal advisors to discuss their particular circumstances. Kafrouni Lawyers makes no warranties or representations regarding the information and exclude any liability which may arise as a result of the use of this information. This information is the copyright of Kafrouni Lawyers.

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