In an agency contract, the company is required to provide the agent with the necessary information and documents needed to complete the required tasks. The company’s directions are dictated by the nature of the commission.

In general, a company must ensure that the agent, a direct employee, is legally well-treated, considering the best interests of both the company and the agent.

For example, the prices that an agent must give to potential distributors or re-salespeople exceed the expected company profits. It may be tempting for a foreign businessperson to conduct negotiations directly with the company, circumventing the agent and cutting the agent’s commission to reduce the cost of the transaction. This behavior is not only unlawful, but breaches the trust between the agent and the company.

The manufacturer must provide the agent with all the documentation related to the goods in question. For example, an import’s shipping documents are not sent directly to the buyer after the manufacturer receives the letter of credit. Instead, the agent receives the documents and finalizes the transaction on behalf of the manufacturer.

In business, information is an asset that could impact how a company secures a transaction. The company must provide the agent with several types of information:

1. Information regarding the agency contract performance.The company should notify the agent if the anticipated commercial transactions are lower than the agent normally expects based on the nature of the product or the characteristics of the business.

   This may occur, for example, if the agent attracts a potential buyer for the manufacturer’s goods, but the manufacturer does not have the availability to fulfill the client’s commercial order. In this case, the profits of the transaction will be less that the amount expected by the agent, and the manufacturer has an obligation to inform the agent of the losses.

2. Information regarding objections to the operation itself.The company should inform the agent if the contract’s terms are accepted or refused, or other unexecuted commercial transactions that the agent has produced for the company.

An agent’s career success is oftentimes measured by one’s performance and reputation. When an agent acts on behalf of a company for transactions, the agent becomes the face of the company to customers in the expansion area. Decisions regarding concluding negotiations, or even the operation itself, should be communicated to the client by the agent quickly to ensure that the agent remains a reputable and trustworthy businessperson.

Reference: Legal > The Pros and Cons of Having an Agent Abroad

This entry was posted on Wednesday, November 9th, 2011 at 5:22 am and is filed under Contract Law. You can follow any responses to this entry through the RSS 2.0 feed. Both comments and pings are currently closed.