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Explanatory Notes
Appointment of Buyer's Representative
EXPLANATORY NOTES This agreement is designed for use by a company which is based outside The Territory which is buying goods from The Territory and wishes to appoint either an individual or a company to represent it in its dealings with the foreign manufacturers or suppliers. Our comments on the specific clauses of the agreement are set out below. 1. Definitions. The description of goods, supplier and territory need to be adjusted depending on the precise circumstances of your contract. In some cases it may be appropriate, for example, to refer to a schedule to the agreement which specifies the goods and/or suppliers to which the agreement refers. 2. Representation. This clause sets out the basic objective of the agreement – namely the appointment of the representative to act on behalf of the company in The Territory. 3. Commencement & Duration. .Clause 3.1 specifies the commencement date and the initial period of the contract. This clause needs to be adjusted depending on the precise terms agreed. Clause 3.2 deals with the continuation of the agreement after the initial period and contains a notice period of three months. If the parties are dealing with each other for the first time, it is advisable to have an agreement which can be terminated relatively soon if the arrangements do not work out satisfactorily but which can be rolled over if things do work out. 4. Duties of Representative. Clause 4.1 starts with some general opening words and then sets out a number of specific duties which the representative if required to perform. You will need to adapt this clause to meet your particular requirements Clause 4.2 provides for the representative to help the company and its personnel when visiting The Territory. Clause 4.3 requires the representative to act in good faith and in the interests of the company in all his dealings. Clause 4.4 is an important provision designed to prevent the representative from making commitments on behalf of the company which have not been authorised. 5. Duties of Company. For any agreement such as this to work effectively, the representative needs clear instructions and guidance from the company on what he is meant to do and this clause is designed to set out the principal duties of the company with respect to dealing with suppliers, shipment of goods, etc In some cases it may be appropriate for a company to refer to its internal procedures, pro forma order forms etc. Clauses 5.2 and 5.3 deal with the way in which the company will pay for the goods. This is not the responsibility of the representative but he needs to know how payment will be made and in some cases, payment may be made via the representative's bank account to the supplier. 6. Representative's Fees & Expenses. Clause 6.1 sets out the commission payable by the company and how this is calculated – by reference to the net purchase price of the goods, excluding transportation and other charges. The clause also identifies when payment will be made to the representative. Clause 6.2 provides for direct expenses to be reimbursed in addition to the commission which is payable. This may be appropriate, for example, where the representative has to travel across The Territory in order to have meetings with the manufacturer. As drafted, expenses have to be agreed in advance if the representative is to receive them, and he then has to justify those expenses with appropriate receipts, etc. Clause 6.3 is designed to make it clear that the normal running costs of his business are covered by his commission. It is sensible, when finalising an agreement such as this for both parties to agree precisely what expenses will be paid in addition to the commission and what expenses have to be borne by the representative. Spelling out the details can save problems later.
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