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Don't Start a relationship with the wrong person!
How to appoint an agent.
Agency selection is critical and affects development of your whole export effort.
The challenge is to appoint an agent who knows the export market and has influence with the key buying personnel in the appropriate sectors and, is committed to your business.
The first step is to draw up a preliminary list with the assistance of embassies, Enterprise Ireland Office Network overseas (or your local Trade Promotion Government Agency), Chambers of Commerce, Banks and personal contacts.
The next step is to write to the organisations and industrialists on that list giving your firm's background and export objectives, and checking whether they act for competitors in that market, and their terms of commission.
The replies you receive form the basis of a short list, which in turn is the basis for interviews when you visit the market.
Trade and banker's references can then be taken up and an appointment made.
Agency Agreement
An agency agreement is a statement, in legally enforceable form, of a commercial contract.
Essential contractual clauses
There are no hard and fast rules but the following is a checklist of essential clauses and conditions of an agency agreement.
Purpose of agreement
Parties to agreement
Definition of terms of agreement
Courts for dispute
Goods to be included
Territory to be covered
Limitations agency
Duties and responsibilities of each party
Conditions of trading between parties
Remuneration of agent
Duration of agreement
Treatment of costs, insurance, freightage
Legal responsibilities
Financial commitments or limitations
Termination of agreement
Penalty clauses
Minimum levels of performance
Changes of ownership
Rights to agreement extension
Mutual training/co-operation needs
Conditions of Sale
The agreement should also deal with conditions of sale such as:
Quantity and detailed specifications for products
Price, ex-works, FOB, CFR, FAS, CIF, DDU etc.
Place of delivery
Date of delivery
Method and time of payment
Trade terms (Incoterms)
The final point mentioned above
‘Incoterms' or more correctly ‘Incoterms 2000' are of critical importance given their universal application.
The chosen international commercial term will have a direct impact on the invoiced price of the goods and this in turn will need to be reflected in any agency agreement.
Article written by Raymond Johnson.
Raymond Johnson is an International Trade Specialist Advisor for the eBSI who specialises in helping European companies to enter African Markets. Raymond is graduate of the Institute of International Trade of Ireland. Raymond may be contacted at rj@ebsi.ie
Do you want to be an International Trade Specialist?
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Ireland
Tel: +353 94 74910
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DISCLAIMER: This article contains information, which is for guidance on matters of general interest only.
There may be omissions or inaccuracies in information contained in the site and the information is given on the understanding that it should not represent a substitute for professional consultation.
Although we have made every effort to ensure the information in the article is reliable, the electronic Business School of Ireland, GTI Learning.com and the Author of this article accept no responsibility for errors, omissions or adverse results obtained from using the information. The electronic Business School of Ireland, GTI Learning.com and the Author of this article issue no guarantee of completeness, accuracy, timeliness or results obtained from using the information.
The electronic Business School of Ireland, GTI Learning.com and the Author of this article will therefore not be liable to you or anyone else for decisions made or actions taken in reliance on the information in this web site.
About the Author
The electronic Business School of Ireland (www.eBSI.ie) is the one and only educational institution which is accredited to deliver the International Trade Specialist Accreditation Programme. Join a growing elite number of accredited international trade professionals around the world with this qualification!
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