When bringing imported consumer goods to the Vietnamese market, companies usually face a choice: sign a commercial agency contract or a contract with a distributor. The two models differ in legal nature and in how risk is allocated, although in practice the names are sometimes used interchangeably. Getting the nature right helps companies choose the correct model from the start.
Commercial agency — a statutory institution
Commercial agency is defined in the 2005 Commercial Law at Article 166 (not Article 167): the agent, in its own name, buys or sells goods for the principal in exchange for a commission. The key point: the agent does not own the goods — it only sells on behalf of the principal and earns an agency commission. Commercial agency relations are governed by Articles 166–177 of the 2005 Commercial Law.
Distributor — no statutory definition
The term “distributor” is not defined by the 2005 Commercial Law — there is no clause reading “under Article X, a distributor means…”. In substance, it is a sale of goods relationship: the distributor buys outright, owns the goods itself, sets its own resale price and bears its own inventory risk. Any text claiming “under Article X of the Commercial Law, a distributor is…” fabricates a provision.
Comparison table
| Criterion | Commercial agency | Distributor |
|---|---|---|
| Legal basis | Arts. 166–177 of the 2005 Commercial Law | Sale-of-goods regime (Commercial Law 2005) — no separate definition |
| Ownership of goods | No (sells on behalf) | Yes (buys outright) |
| Commission / profit | Agency commission | Buy-sell price margin |
| Inventory risk | Borne by the principal | Borne by the distributor |
| Resale pricing | As directed by the principal | Decided independently |
Which model for imported consumer goods?
Choose commercial agency when the company wants to control resale prices and the brand, since resale prices follow the principal’s directions — suitable for consumer goods that need uniform list prices. Choose a distributor when the company wants to shift inventory risk to the partner and expand the market quickly, accepting that the partner sets its own resale prices. For fast-moving imported consumer goods with price volatility, the allocation of inventory risk is often the deciding factor.
Legal framework and validity
The 2005 Commercial Law remains in force as of 14/10/2026.
Frequently asked questions
Is a distributor a type of agent? No. An agent sells on behalf of the principal, owns no goods and earns a commission; a distributor buys outright, owns the goods and earns the price margin.
Which article defines “distributor”? None. The 2005 Commercial Law does not define “distributor”.
Which article defines commercial agency? Article 166 of the 2005 Commercial Law (not Article 167).
Who bears inventory risk? In the agency model, the principal bears it; in the distribution model, the distributor bears it.
Choosing between an agency or a distribution contract for your imported goods? Reach us via the Contact page of FLAT Law Firm for support.
The information in this article is for reference only and does not constitute legal advice.
The legal content of this article will be reviewed by the AI Legal Council of FLAT and submitted to the owner for approval before publication; it is not an opinion of a licensed lawyer and does not replace legal advice for specific cases.