This contract is intended to be used when one company, which supplies products or services, is interested in expanding its sales overseas and appoints either an individual or a company (the Representative) with abundant knowledge and expertise in overseas trade and international marketing.
This contract allows the Representative to negotiate and close negotiations on the company’s behalf. Nevertheless, when negotiating with clients, the Representative shall offer the products strictly according to the clauses and circumstances of the sale, which the company has predetermined.
The Representative carries out his/her activity continuously and is paid by commission based on sales achieved, although on occasions there may be agreement as to the payment of fees for management and representation expenses.
Parties Clauses
- Object of the contract
- Territorial exclusivity
- Commitment to non-competition
- Promotional material and samples
- Negotiation of transactions
- Approval of transactions
- Charges for transactions
- Remuneration of Representative
- Calculation of commission
- Date of payment of commission
- Management and representation expenses
- Term of contract
- Compensation
- Applicable law and competent jurisdiction
- Language
Sample of content
DATE: ………………..
BETWEEN:
…………………………… [company legal name] whose registered office is at ……………………………….
[address, city and country] and registration/fiscal number is …………………………, represented by
……………………………………………………. [surname and first name, position] (hereinafter referred
to as “the Company”),
AND:
Alternative A [When the Representative is an individual and independent professional]
Mr./Ms. …………….., of legal age, ……………………….. [include professional qualification], Tax
Identification Number………….., registered address …………… , acting on his/her own behalf
(hereafter, “the Representative”).
Alternative B [When the Representative is a company]
…………………………… [company legal name] whose registered office is at ……………………………….
[address, city and country] and registration/fiscal number is …………………………, represented by
……………………………………………………. [surname and first name, position] (hereinafter referred
to as “the Representative”).
Both parties acknowledge each other’s right and ability to undertake the terms of the present
Contract and,
DECLARE
1.That the Company manufactures and sells ………………….. [describe the Company’s
products], and is interested in expanding into international markets.
2.That the Representative is interested in carrying out the tasks of promotion and export
management of the products manufactured by the Company, given his/her professional
knowledge and experience in overseas trade and international marketing.
3. That the Parties have reached an agreement as to the overseas promotion of the
aforementioned products, subject to the following points:
- OBJECT OF THE CONTRACT
The object of the present Contract consists of the promotion and sale in international markets
of the products manufactured by the Company as specified in Annex 1 of the present Contract.
- EXCLUSIVITY AND TERRITORY
The Representative shall carry out his/her activity exclusively for the Company in the territory
named in Annex 2 of the present Contract, and may not carry out such activity beyond the
designated territory.
- COMMITMENT TO NON COMPETITION
Alternative A. Without authorization in writing from the Company,
the Representative shall not manufacture, distribute or represent the type of product that competes directly with the
products manufactured by the Company. To this end, the Representative declares that on the
date of signing the present Contract, (s)he acts as a representative, agent, or distributor for the
companies and products listed in Annex 3 of the present Contract. The commitment to noncompetition is to be upheld throughout the term of the present Contract and for a further …..
[1, 2, 3] years after its date of completion.
Alternative B. Throughout the term of the present Contract, the Representative may
manufacture, distribute or represent products similar to those of the Company, provided that
the Representative informs the Company in writing of such intention.
- PROMOTIONAL MATERIAL AND SAMPLES
The Company shall provide the Representative with advertising material (catalogues, brochures,
product leaflets, etc.) and samples of the products, the promotion and sale of which are set out
in Annex 1 of the present Contract. The Representative distributes such material among
potential clients and shall be accountable for any deterioration or loss thereof.
Some Tips
DATE
The date when the contract comes into force is the one that appears in its header, as mentioned
in the final paragraphs of the contract, before signatures (This Contract comes into force on the
date is written above).
In some contracts -for example in the Supply Contract- the date of coming into force is also
mentioned in one of the clauses. In these cases you have to verify that the two dates inserted in
the contract (in the heading and in the corresponding clause) are the same, in order to avoid
discrepancies.
PARTIES
Be sure to insert in the first page of the contract the full details of the Parties:
- When a Party is a company you must insert the following information: legal name, legal form
(limited, incorporated, etc.), full address, registration data and fiscal identification number.
- When a Party is an individual that works as an independent professional (for example a
commercial agent) you must insert the following information: full name, profession, full
address and fiscal identification number.
CLAUSES
Clauses with different alternatives: choose the most favorable
In the most important clauses of each contract (exclusivity, payment terms, applicable law and
competent jurisdiction, etc.) several drafting alternatives are proposed so you can choose the
most appropriate to each situation. Therefore, the user before submitting the contract to the
other Party must choose the alternatives that seem best suited to their interests, and eliminate
the rest.
Clauses with blank spaces to be completed
In several clauses of the contract blank spaces appear with dots (…………………..) that the user
has to complete inserting text. Following the dots, between brackets, you will see the data and
explanations to insert the text.
- When the text between brackets is in normal letters (the same as the contract) and
separated by “,” or the word “o”, the user must insert one of the options suggested.
Example of blank space (……..) with options to select between brackets:
Orders handled before completion of the present Contract which produce sales transactions
within ………. [1, 2, 3, 6] months shall entitle the Agent to receive the corresponding commission.
In this case the user must choose between options 1, 2, 3 or 6 months and insert one in the blank
space (……..).
- When the text between brackets is in italics the user has to insert the data and information
requested and eliminate the bracketed text.
Example of blank space – (………) to insert text:
Both parties, by mutual consent, resolve to refer any dispute to the Rules of Conciliation and
Arbitration of the International Chamber of Commerce by one or more arbitrators appointed in
accordance with said Rules. The place of arbitration shall be ……….. [city and country]. In this
case the user must insert in the blank space (………..) the city and country have chosen to conduct the
arbitration and afterward eliminate the bracketed text [city and country].
Notices Clause
Sometimes it may happen that the official address of the Parties which appear at the beginning
of the contract is different from what is to be used for communications between the Parties
during the terms of the contract. In this case, the user should include at the end of the contract
a Notices Clause.
Example of Notices Clause:
Notices. – In order to comply with their contractual obligations, the Parties establish the
following address for the provision of notices related to this contract:
– Party 1 ……………………………………………………. [insert full address].
– Party 2 ……………………………………………………. [insert full address].
SIGNATURES
People who sign
Persons signing the contract on behalf of the company must have the authority to do so and
preferably, be entitled on the basis of a power of attorney. Below the signature, in addition to
the full name of the person that signs his/her position must be inserted. When one of the Parties
who signs is a natural person (for example a commercial agent in an Agency Contract) obviously
he or she is the person that has to sign the contract.
The laws of some countries require that contracts, to be valid, shall be signed in front of
witnesses or a public notary. Therefore, before signing a contract you should be informed about
the requirements that may exist in each country.
Place and date of signature
Usually contracts are signed by both Parties on the same date and place. Nevertheless, in
international contracts, due to physical distance, it is common that each of the Parties sign in
different dates and places. This contract provides for both alternatives so it comes to choosing
the most appropriate to each situation.
Number of copies
Usually, the Parties sign two copies of the contract, each Party retaining one of them, but can
also arise the need to sign more copies. In this case all you have to do is mention explicitly the
number of copies to be signed in the paragraph that is included at the end of the contract (Both
Parties declare their conformity to the present contract, which is signed in …… copies, each of
which shall be considered an original).
GENERAL RECOMMENDATIONS
The Parties must sign all pages of the contract, including Annexes, so they are also valid. It is
better to use ball point or pen (not pencil) in a color other than black (e.g.: blue); this makes it
easier to distinguish an original document from a photocopy.
It is preferable (although no mandatory) to express sums of money and percentages in words
and figures. Of course, the words and figures for a given amount must match exactly. You also
must insert the currency in which the amounts are expressed. It is advisable to use the rules
establish by ISO that name each currency by three capital letters (EUR for euro, USD for dollar,
GBP for sterling pound, JPY for Japanese yen, etc. – you can get the acronyms of every currency
in the website www.oanda.com).
Once you have chosen the best alternatives of each clause and have completed the blank spaces
you should revise the whole contract to remove remaining paragraphs and correct any errors.