Q: We have a product that we want to sell in Spain. We have been recommended two companies there who we may be able to work with – one is a distributor and the other calls itself a sales agent. What do we need to think about when choosing between the two?
Both roles have distinct advantages and potential drawbacks. The choice depends on your business priorities and strategy, legal and compliance considerations, and the nature of your product and market.
A sales agent promotes and negotiates contracts between the principal (your business) and the customer. They may also conclude contracts on your behalf. Typically, sales agents are paid a commission and do not have contractual liability to the customer. This arrangement allows you greater control over sales activities and customer interactions which can be beneficial if your product requires customisation or a close customer relationship.
Note that under Spanish law, you may be required to pay compensation to the sales agent after termination of the agency agreement. You should take local advice on this so that you are aware of the potential liability at the end of the agreement.
A distributor buys goods from the supplier (your business) and resells them, adding a margin to cover their costs and make a profit. They contract, on the one hand, with you to buy the product and, on the other, with their customer to sell it. This means the distributor owns the products between buying the products and selling them on. Distributors are generally more motivated to sell the stock they purchase, as they bear the risk of unsold inventory. This arrangement can reduce your administrative costs and eliminate the need for an established place of business in Spain. However, you will have less control over the distributor’s activities, which may not be suitable for products requiring tight control over marketing and pricing.
There are various factors to bear in mind when deciding between a distributor and a sales agent for selling your product in Spain. Opting for a sales agent may allow you to retain more control over your product. However, while your risk may be lower with a distributor, the distributor’s margin will likely increase in accordance with the level of risk associated with the products. Additionally, competition rules may impact distributor appointments more significantly than agency relationships. To avoid falling foul of competition law though, it is crucial that the sales agent genuinely functions as a sales agent and that it does not just ‘call itself’ as such. Lastly, UK legislation increasingly requires monitoring compliance throughout the supply chain, which can be more straightforward with a distributor.
Q: We have recently been acquired by a US company. We are now being asked to send details of our employees to this company in the US. We are also expected to use their IT support company, which seems to be based in India. Is there anything that we need to do to protect the personal data of our employees?
Before making any international transfers of personal data, you will need to ensure that these are compliant with data protection law in the UK. In the situation described, the transfer of employee personal data from the UK entity to the US-based parent company will be a ‘restricted transfer’, meaning that special attention needs to be paid to protect or safeguard the data. This may also be the case for the services provided by the IT support company based in India if they will be accessing personal data as, although the data would likely remain in the UK on the UK entity’s systems, the accessing of personal data by someone outside the UK is considered a restricted transfer.
If the data transfers are restricted transfers, you will need to first assess whether your aims can be achieved without sending employee data to the US or without allowing the Indian IT support company to access personal data.
For the transfer of personal data to the US, you will need to check whether the company there is certified under the EU-US Data Privacy Framework and if so, whether it has opted in to receiving personal data from the UK. If that is the case, the data can be transferred without the need for any additional safeguards. If it is not the case, you will need to use standard data protection clauses which have been approved as an appropriate transfer mechanism under UK GDPR.
For some countries, the UK has ‘adequacy regulations’ in place which allow for transfers to be made because the country in question has been assessed as providing adequate protection for people’s personal data. For India, there are no adequacy regulations in place, so again you will need to use the approved standard data protection clauses.
Q: We are a retail business selling to consumers. We recently realised that because of a glitch in the software we use, we have not yet invoiced some of our customers even though the products were sent to them last year. Can we now issue invoices or is it too late?
To understand whether you can still issue the invoice, you first need to look at the contract to find any terms regarding payment and invoicing. For example, the contract may require invoices to be issued within a given time after delivery. If that is the case, successfully arguing a right to invoice after this time would be difficult.
If the contract does not state a time limit for the submission of invoices, you should issue your invoices.
When issuing your invoices be aware that recipients may dispute their liability to pay due to your delay in issuing the invoice.
Firstly, there may be an argument from some of your customers that invoices must be issued within a ‘reasonable time’, but they have had the benefit of using your products for several months, so most would be expected to pay.
Secondly, in some situations, a long delay in invoicing may imply that you have waived the customer’s payment obligation. This argument is challenging to make though, as waiver generally requires a positive action to be taken rather than it being sufficient to simply not do something. Failing to invoice on time may not be enough to establish a waiver.
Finally, consumers benefit from certain protections and the late issuing of invoices may be ‘unfair’. If you have a term in your contracts reserving the right to submit invoices at any time, this may be considered unfair and therefore unenforceable.
