Commercial Representation Agreement

A company that sells products to several countries may use trade agents who act as intermediaries in the execution of purchase and sale agreements with third parties. In these cases, there is a commercial representation agreement between the company (also called principal) and its trade agent. One of the main characteristics of a representation agreement is that contracts with third parties are executed in the name and on behalf of the company. In general, the trade agent receives, for its services, a certain percentage of the profit as a commission.

Commercial representation agreements empower the agent to execute contracts with third parties on behalf of the company and therefore to bind the company. For this reason, when you execute a representation agreement it is important that the mission of the agent for and on behalf of the company be clearly stipulated, as well as how he will be entitled to execute contracts with third parties on behalf of the supplier. Also, issues such as compensation, contract termination and remuneration on account of goodwill should be dealt with.

Law establishes some complementary regulations for commercial representation agreements. Among them, the agent should investigate the solvency of a third party in order to prevent liabilities, undertaking not to compete against the company. Gimbrère International Advocaten can help you. Our contribution goes beyond merely analysing the content of the agreements you wish to formalise by virtue of a contract and the (potential) traps you should avoid: the way in which these contractual agreements are written is also paramount, and we will take responsibility for establishing your agreements in writing in an unequivocal way.

As it can be inferred from the foregoing paragraph, establishing the rights and obligations of principal and agent is very important in a commercial representation agreement. And if, in spite of having taken all due precautions, the commercial relation with the other party fails, Gimbrère International Advocaten will be pleased to assist you in solving the dispute, firstly, by trying to find an acceptable solution through mutual agreement.

« Back to overview