Tag Archives: choosing an agent

Agency and Distribution Agreements

Check the local laws

Before entering into an agreement with an agent or distributor overseas, you need to do some research on the law in the territory where he or she is based. In some countries, for example, there are rules that require agency agreements to be registered with a Government department or that stipulate only nationals of the country can become an agent of a foreign supplier.

So, before signing anything, get some local legal advice early on to cover:

  • Who is entitled to act as an Agent? – is this confined to a national or company owned by nationals of the State or can a foreigner act as your agent?
  • What are the basic legal rights of the Agent and the Principal?
  • What are the rules concerning termination of the Agency?
  • Are there any registration procedures?
  • Does the law distinguish between agents and distributors? In Europe, the rules only apply to agents but in some countries of the Middle East, the distinction is blurred and a distributor might have the same termination rights as an agent.

You might think that the issues mentioned above can be avoided if you say English law will govern the agreement with your agent. Unfortunately, it is not so simple and the local courts or even the legislation may take a different view.

Remember this…

Be sure to spell out all the key requirements in your agreement – territory, products, commission, initial period, targets, termination rights and much more. Don’t ever omit any important matters in the hope they will sort themselves out later.

Contract Templates

Included in Exporting Made Easy – the book are some template agreements, which you can also order individually for download from ContractStore.com:

How to Choose an Agent for Export

When appointing an agent, a good starting point is to assess your view of the “ideal” agent. His or her appearance, the words they use, their behaviour; is this someone we feel we could work with?

We have asked hundreds of exporting companies to comment on the qualities they believe are important in an “Ideal” agent and their views can be summarised as follows:

  1. Loyal
  2. Well Connected
  3. Professional
  4. Knowledgeable
  5. Honest
  6. Focused
  7. Business Fit
  8. Proactive
  9. Partnership
  10. Relationship
  11. Communicator
  12. Trustworthy/truthful
  13. Well resourced
  14. 
Enthusiastic
  15. Respected
  16. Realistic
  17. Presentable
  18. Solvent
  19. Shared “ethos”
  20. Good track record

But finding the right agent isn’t just about personality and skills. It also means choosing the right type of agent. Here’s a summary:

Types of Agent

  • Commission Agent

Receives a commission payment from the seller (in ••return for the introduction it provided between seller and buyer leading to the sale). This is the most common type of agent

  • Stocking Agent

Receives and holds goods as consignment stock but still ••does not have title to the goods

  • Servicing Agent

Provides a servicing/maintenance facility on behalf of the principal

Legal Definitions

  • Exclusive – the whole market is covered by one agent
  • Non Exclusive – several different agents operating in one market
  • Sole agent – an agent + key accounts. There’s one agent for the market but certain key accounts are excluded. The reasons for this could be that the principal already has close contacts with the client(s), that the buying decision is made in another country, or there are Pan-European or global prices in place for certain clients.

This article is an adapted extract from Exporting Made Easy by Simon Bedford and Giles Dixon