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Thursday, 08 April 2010 05:18

International Agency Agreement

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Chapter 19 B. Forms and Documents

Note: The following forms and documents are prepared by the above under the laws and practice prevailing as of [Date]. Seldom is a model form or document directly suitable to a transaction without adaptation to the particularities and circumstances of the matter. Readers are invited to contact the contributors regarding any questions concerning the application of the forms and documents.

Model Form

This model form has been prepared according to the author's previously explained views. It would apply therefore to agency agreements within the intra-European Union trade. Furthermore, it refers to self-employed commercial agents (1) and to the sale of goods.

INTERNATIONAL AGENCY AGREEMENT

AN AGREEMENT made in .......... on the ..... day of.......20.... Between ................................................... having its registered office at ....................... (2) (hereinafter called "the Principal") and ............................................................ whose registered office is at/of (3)........................ (hereinafter called "the Agent") it is agreed as follows:

Article 1 (OBJECT OF THE AGENCY)

The principal appoints the Agent to be its commercial agent to negotiate the sale of its products listed in Schedule A (hereinafter called "the Products") in ................... (hereinafter called "the Territory") subject to the terms and conditions hereinafter set out.

Article 2 (DURATION OF THE AGENCY)

This agreement is made for a definite period, commencing on ........... and expiring on ........... notwithstanding can be extended as stated in Law. (4)

Article 3 (OBLIGATIONS)

In performing its/his activities the Agent must look after the Principal's interests and act dutifully and in good faith. So must act the Principal in its relations with the Agent.

In particular, the Agent must:

(a) make proper efforts to promote the sale of the Products following the Principal's reasonable instructions and without recourse the Principal for any expense incurred unless it has been specifically authorized by the same in writing.





(b) bring to the notice of the Principal any information available to it/him that may be useful for the sale of the Products, particularly any one related to the solvency of customers having to conclude a transaction.

(c) receive claims from the customers and forward them to the Principal.

(d) send to the Principal within the fortnight following the end of each calendar month a report of stock held and sales made in the Territory during that month, together with a briefing of his activities in relation with the performance of this contract.

(e) keep separate books of account and records for the agency hereto.

The Principal must in the same way:

(a) obtain and give to the Agent the information needed for the performance of its/his obligations herein, specially giving the Agent notice of any anticipated fall in the volume of sales and of any acceptances, refusals or non-executions of transactions procured by the Agent as soon as it/they come/s to its notice.

(b) provide the Agent with all materials (such as price lists, catalogs, samples, etc.) necessary for the marketing of the Products and for carrying out its/his obligations under this agreement.

Article 4 (NON-TRANSFERABLE NATURE)

The Agent cannot assign this agreement or its/his rights hereunder or any part thereof, or carry out its/his activity with recourse to sub-agents without the Principal's authorization in writing.

Article 5 (REMUNERATION)

The Agent shall be entitled to a ..... per cent (5) commission on all sales of the Products concluded during this agency life to customers domiciled in the Territory, even if he/it was not involved in them.

He/It shall also be entitled to such commission on the sales concluded with customers belonging to the Territory within the ..... days (6) following termination of this contract if either their conclusion is mainly due to the efforts the Agent made during the agency period or the customers' orders had reached the Principal or the Agent before termination of the agency.

The Agent shall bear any expenses whatsoever that performance of his obligations under this contract may require.

The value of the sales for the purpose of calculating the commissions shall be the net price of the Products as stated in the relevant invoices.

Commissions shall become due either on the date the Principal performs or should have performed the relevant sale or on the date on which the customer does it, whichever is first, and shall be payable quarterly, that is to say, the last day of the calendar quarter, the total amount due within such quarter. (7)

Notwithstanding the former provision, the right to commission will be lost in case of non-fulfillment on the part of the customer, provided that the Principal gives evidence of it and he is not to blame. In case the Agent had already been paid the commission, he/it should refund it.

Article 6 (TERMINATION)

Either party may terminate this contract even if extended by written notice sent by registered mail with advice of delivery to the other. The period of notice shall be of one month for the first year following commencement of his agency, two months for the second year, three months for the third year and six months for the following years. (8) Such periods will be counted from the date of effective delivery of the notice.

Notwithstanding the above provision, any provision laid down by Law on immediate termination shall be applicable provided that notice is given in writing as above stating the grounds for termination of the contract.

Either party shall also have the right to terminate this contract forthwith in the above manner:

(a) if the other party commits a breach of any of the terms or conditions herein.

(b) in case of bankruptcy or insolvency of the other party.

Moreover, the Principal will be entitled to such termination in case the Agent fails to procure its annual sales on top of ....... (9) This amount could be increased by the Principal up to ....... per cent each year. Upon termination of this contract, at the request of the Principal, the Agent shall return to the Principal all materials of any kind whatsoever supplied to him/it by the Principal and relating to the agency as well as any stock of the Products belonging to the Principal which are in his/its possession.

Article 7 (COMPENSATION) (10)

The Agent shall be indemnified upon expiration or termination of this contract for any cause other than breach of contract on his/its part in accordance with the following provisions: (a) The Agent shall be entitled to an indemnity for the new customers procured to the Principal during the contract life and any significant increase in the volume of business with existing customers established in the Territory. For the purpose of knowing which are the customers existing in the Territory at the date of commencement of this contract a list duly signed by the parties hereto is attached as schedule B. The amount of this indemnity will be equal to the Agent's average annual remuneration taking into account the commissions he/it received during the whole life of the contract or during the last five years only should such life be longer.

(b) The Agent shall be also entitled to a compensation for the costs and expenses he had incurred for the performance of his obligations under this contract which had not been able to amortize with the amount received under (a) above.

The Agent shall not be indemnified in either of the two fashions above in case he/it had either caused termination or voluntarily terminated the contract, that is to say, without grounds for immediate termination nor on grounds of his age, disability or illness preventing him/it from continuing the performance of the agency.

The Agent shall lose any entitlement to be indemnified should he/it not request so from the Principal in writing and by registered mail with advice of delivery within one year following termination of this contract.

Article 8 (RESTRAINT OF TRADE)

During the whole life of this contract and during one year as from its termination or expiration, the Agent shall not represent, sell, manufacture or be involved either directly or indirectly in the manufacture, importation, sale or marketing of any products which are identical or similar to the Products in the Territory, unless a prior written authorization is given to him/it by the Principal.

Article 9 (CONFIDENTIALITY)

The Agent hereby undertakes not to divulge any information related to the Principal's business he/it had learned because of this agency.

Article 10 (APPLICABLE LAW AND COMPETENT JURISDICTION)

It is expressly agreed that this contract shall be governed by the laws of.... (11) and any dispute, difference or claim which may arise between the Principal and the Agent in connection with the construction or performance of this contract or the rights and obligations of the parties hereto shall be submitted to the law courts of the city of.... (12)

IN WITNESS WHEREOF, the parties hereto have caused due to execution of this contract by signing it in duplicate, in the place and on the day and year first herein written.

The Principal The Agent

Schedule A: List of Products

Schedule B: List of existing customers

(1) Bear in mind what has been stated in the paragraph on Dutch Law on page 5, footnote 1.

(2) Contract Law in some jurisdictions demands the provision of further details, for example, the marital status, the company registration number, or the identification and powers of the person signing on behalf of a company.

(3) Address, if an individual.

(4) See the legal provision implementing Article 14 of Directive 86/653 (see Commentary at page 8).

(5) Different percentages can be agreed for the different types of products.

(6) Check what the applicable law establishes, for instance 90 days at least in the case of [Country] law.

(7) Check whether the applicable law has provisions in this respect.

(8) Note the discussion in the Commentary on the differences in domestic laws on this point.

(9) Insert an amount as the minimum value of business sought through the agency.

(10) Beware the mandatory nature of legal provisions in regard to this point.

(11) Insert country, bearing in mind the points made in the Commentary as to this issue.

(12) Insert city and country, bearing in mind the points made in the Commentary as to this issue.

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