Agency/Distributor Agreements
Agency/Distributor Agreements
Earlier, in chapter 3, I discussed your relationship with overseas distributors. A manufacturer or importer/exporter will seldom agree to meet all of a distributor's conditions. Most terms are negotiable, and a firm that is not internationally known might have to grant more demands than others in a more favorable position. The following five tips might help to avoid risk in doing business with distributors:
1. Put the agency agreement in writing.
The rights and obligations resulting from a written agreement require no extraneous proof and are all that is necessary to record or prove the terms of a contract in most countries.
2. Set forth the benefit to both parties in the agreement.
Well-balanced agreements should not place an excess of profitless burden on one of the parties. Performance of the agreement might be impossible to enforce against a party who has no apparent benefit from it.
3. Give clear definition and meaning to all contract terms.
Many English terms that are spelled similarly in the foreign language have entirely different meanings. Require that the English version prevail when there is doubt. To avoid conflict use INCOTERMS.
4. Expressly state the rights and obligations of the parties.
The agency contract should contain a description of the rights and duties of each party, the nature and duration of the relationship, and the reasons for which the agreement might be terminated.
5. Specify a jurisdictional clause.
If local laws will allow, specify in the contract the jurisdiction to handle any legal disputes that might arise. Where possible, use arbitration. Basic arbitration rules and principles are generally the same anywhere. Clauses in the contract should contain identification of the arbitration body or forum. You can obtain model arbitration clauses from the American Arbitration Association, 140 West 51st Street, New York, NY 10020 or the International Chamber of Commerce, 1212 Avenue of the Americas, New York, NY 10036.
Earlier, in chapter 3, I discussed your relationship with overseas distributors. A manufacturer or importer/exporter will seldom agree to meet all of a distributor's conditions. Most terms are negotiable, and a firm that is not internationally known might have to grant more demands than others in a more favorable position. The following five tips might help to avoid risk in doing business with distributors:
1. Put the agency agreement in writing.
The rights and obligations resulting from a written agreement require no extraneous proof and are all that is necessary to record or prove the terms of a contract in most countries.
2. Set forth the benefit to both parties in the agreement.
Well-balanced agreements should not place an excess of profitless burden on one of the parties. Performance of the agreement might be impossible to enforce against a party who has no apparent benefit from it.
3. Give clear definition and meaning to all contract terms.
Many English terms that are spelled similarly in the foreign language have entirely different meanings. Require that the English version prevail when there is doubt. To avoid conflict use INCOTERMS.
4. Expressly state the rights and obligations of the parties.
The agency contract should contain a description of the rights and duties of each party, the nature and duration of the relationship, and the reasons for which the agreement might be terminated.
5. Specify a jurisdictional clause.
If local laws will allow, specify in the contract the jurisdiction to handle any legal disputes that might arise. Where possible, use arbitration. Basic arbitration rules and principles are generally the same anywhere. Clauses in the contract should contain identification of the arbitration body or forum. You can obtain model arbitration clauses from the American Arbitration Association, 140 West 51st Street, New York, NY 10020 or the International Chamber of Commerce, 1212 Avenue of the Americas, New York, NY 10036.
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