Deposit audit assertion doubt

haridas rao (73 Points)

04 October 2021  
A company has obtained deposit from a stockist and has made an agreement with the stockist for the maintenance of its stock and distribution.
Now we have a senario where the agreement has been made between the managing director( name in srcond party) and stockist ( name in first party) rather than between the company and stockist.
Is this procedure correct?
is the company liable to pay back the deposit at the end of the agreement period?
is it important to have the company as the second party in the agreement as the concept of separate legal entity applies?
does a revision in agreement necessary?