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Dossiers internationaux
Practice review: agency or distribution? The characterization drives liability
Mischaracterizing a relationship as agency or distribution can bring unexpected compensation and liability.
A typical scenario: a contract with an overseas partner is nominally distribution but operates more like agency, and in a dispute it is recharacterized, triggering unexpected compensation duties.
Agency and distribution differ in liability, compensation, and termination rules, so a mismatch between operation and label is risky.
The lesson: keep the contract's characterization consistent with actual operation, define roles and responsibilities, and design terms against the target market's mandatory agency/distribution rules.