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Agency agreement drafting tips

Time:2014-03-13 Hit:980

Agency agreement drafting tips

  An agency contract is an agent acting in the name and on behalf of the principal. The principal shall bear all the responsibilities arising therefrom, which is different from the distributorship agreement; however, these two kinds of agreements are alike when drafting such contracts. Considerations for agency agreement or distribution agreement are as follows:

  1. Exclusive or non-exclusive: Subject to the terms of this agreement, the principal appoints the agent as its non- exclusive agent in the territory.
  2. The agent shall, during the continuance of this contract, diligently and faithfully serve the principal as its agent and shall undertake to use as its best endeavour to maximize the sale of the products in the territory.
  3. The agent may not be entitled to sell any of the products to any person or company residing outside of the territory except with the principal’s written consent.
  4. The agent shall keep the principal fully informed from time to time of market condition within the territory for the products and of activities and prices of competitors and shall provide to the principal any available information relevant for furthering the sale of the products.
  5. The principal agrees that it shall promptly advise principal any inquiries or order for the products whether within or outside of the territory, which may from time to time be received the products the agent shall immediately transmit such order to the principal.
  6. The agent may receive on each sale of products during the term of this contract a commission of five percent of the net cash received. Any commission stipulated and paid hereunder shall be deemed to cover all costs, fees, charges and other expenses incurred by the agent in connection with the respective sales of the products.
  7. In the case the agent fails to achieve the minimum purchase amount as specified hereof, for any reason unless solely and apparently attributable to principal, principal shall has the right to terminate this contract or request the compensation with respect to all damages, including but not limited to, the loss of sales opportunity, expressly or implied, arising from the non-completion of the minimum purchase amount, or sell the products directly to any third party in the territory. Notwithstanding the foregoing, provided, however, that for the compensation to principal subject to this paragraph, both parties recognize that damages arising from the said non-completion by the agent would be complicated to compute. If the agent breaches or fails to satisfy its duty of minimum purchase amount, then the principal may demand from the agent the lump sum of 500,000 RMB liquidated damages or terminate this contract, and sell the products directly in the territory.
  8. Nothing herein contained shall constitute any authority to the agent to negotiate, settle or compromise any claims or disputes on behalf of the principal and authority to give any guarantee or warranty in respect of the products other than such as principle may from time to time in writing expressly authorize.
  9. In the case that the agent fails to achieve the minimum sales target for any reason unless solely attributable to the principal, the principal has the right to terminate this contract and to request compensation concerning all damages.

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