Incoterms® and Commercial Contracts

ICC Model Mergers & Acquisitions Contract 1 - Share Purchase Agreement

ICC Model Contract on Distributorship

Distributorship contracts are one of the most frequently used means for organizing the distribution of goods in a foreign country. Almost every company engaged in international trade has some distributors abroad, which means that most exporters will be faced with drafting an international distributorship agreement at some point. But one of the difficulties that traders face when drawing up contracts is the lack of uniform regulations. This means that parties must refer primarily to the rules set out in their agreements, which in turn makes the careful drafting of such contracts vital.

The ICC Model Contract on Distributorship provides a uniform contractual framework which incorporates the prevailing practice of international trade. It specifically applies to agreements under which the distributors act either as buyers and resellers, or as importers who organize distribution in the country in which they operate. This new revised version takes into account recent developments in the laws affecting distribution.

Law of agency contracts
Almost every company engaged in international trade will at some point in its growth make use of agents abroad. Most exporters (whether large or small) must therefore face the problem of drafting an international agency contract.

Since the use of the word "agency" in international trade does not always match the legal definition of the term it is recommended that the parties clearly qualify their relationship in the contract.
Agents may be referred to as sales representatives.
There are different categories of agents (e.g., "buying agent" or "service agent"), and in some countries, special rules govern contracts with agents categorized as employees. In such cases, the rules applicable to employed agents will apply.

  • Buying agents
  • Service agents
  • Employed agents

Disclosure of principal
An agent may or may not disclose the fact that it is acting on behalf of a foreign exporter, the principal. In civil law countries, as a general rule the principal may not directly sue the customer if the agent has not disclosed the principal's existence to the customer - only the agent can sue the customer.
To avoid this constraint, the exporter should contractually require the agent to disclose during any sales or professional communications the fact that he is acting as an agent, or contractually require the agent to assign to the principal any relevant claims against customers.

Actual and apparent authority
Actual authority refers to authority which the principal gives expressly to the agent.    
Apparent authority (or ostensible authority) is the authority that an agent appears to have to others.

Under certain circumstances, a third party may rely on an agent's apparent authority to bind the agent or principal to the contract. Thus, the principal should avoid giving the impression to third parties that the agent has full authority to bind the principal.
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