This distribution agreement regulates the commercial terms whereby one business, typically a manufacturer, supplies goods to another undertaking for resale or onward supply. If a business wishes to expand its operations both domestically and abroad without having to set up new branches, it can do so by appointing a distributor. Because in this arrangement the parties are two separate undertakings and do not act on behalf of each other, the business is able to avoid bad credit risks and is not liable for contractual claims brought by the end user. The establishment of a single, European market has meant that these distribution agreements have become an important business relationship. In order to ensure that the arrangement works well, it is important that there is a clear agreement between the parties.
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