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Explanatory Notes
Chinese Representation Agreement (Tendering)
This Agreement is between a Client in one country which wishes to appoint a Representative in another to introduce it to potential business. The Agreement is fairly limited in scope and is not intended as a fully-fledged agency agreement. Instead, the Representative's activities are confined primarily to providing tender information to the Client. The Agreement nonetheless contemplates that if matters work out between the two parties, the Representative might become the local agent or even local partner of the Client. Dealing with the specific clauses: 1. REPRESENTATION This sets out the appointment of the Representative. It is not stated to be an exclusive arrangement. 2. COMMENCEMENT AND DURATION This Clause fixes the commencement date and initial duration. Either party has the right to terminate on giving notice - 3 months or whatever period is agreed between the parties. Unless terminated, the agreement will continue from year to year. 3. DUTIES OF REPRESENTATIVE This sets out the obligations of the Representative which is essentially to register the Client with relevant government and other departments and issue tender invitations and to forward tender documents to the Client, plus such other services as the Client may reasonably request. 3.2 assumes that the Client will visit the Territory from time to time and that the Representative will look after visas, hotel accommodation as well as setting up meetings with prospective customers. 3.3 imposes a 'good faith' obligation on the Representative. 4. REPRESENTATIVE'S FEES AND EXPENSES This Clause contemplates that the Client will pay a fixed fee for the Representative's services as well as reimbursing expenditure which is occurred. That expenditure must have the Client's prior written authority. Tender documents can be expensive and the Client will only want to pay for them if he has expressed an interest in the tender and authorised the Representative to obtain them. In 4.4 there is provision for the Representative to obtain a finder's fee if the Client obtains a contract award as a result of the Representative's efforts. In 4.5 the Agreement assumes that if the Representative has a contracting role on a successful tender, it will make a profit on its activities, in which case no finder's fee will be appropriate. 5. TENDERS This deals with the possibility of the Client needing to show that it has a local agent in order to be able to submit a qualifying tender. The Representative, in effect, has the right of first refusal for appointment of agent, but if terms cannot be agreed, the Client is free to appoint somebody else. In 5.2 the possibility of the Representative submitting a tender in its own name is contemplated. In such circumstances, a 'Teaming Agreement' will be needed and that is referred to here. 6. LOCAL PARTICIPATION In many countries, a foreign company which wishes to do business needs to have a local agent or partner. This clause gives the Representative the right to be considered for that role if the Client decides to set up in the Territory but does not bind the Client to appoint the Representative. Note also in many countries care must be taken as regards registration of agency and representation agreements as termination may involve the payment of compensation by a principal. 7. RELATIONSHIP OF PARTIES This clarifies the relationship, in particular, making it clear that the Representative has no authority to enter into commitments without the Client's prior written consent. 8. CONFIDENTIALITY The nature of the Agreement is such that confidentiality is clearly required and this is specified here. 9. ASSIGNMENT AND SUBCONTRACTING A standard clause - this is a personal arrangement and assignment and subcontracting would not be appropriate without consent. 10. TERMINATION Either party can terminate if the other is in breach or becomes insolvent. 11. COMMUNICATION AND NOTICES This clause assumes that each party will nominate somebody as the principal contact between the two and it also deals with the method of sending formal notices under the Agreement. 12. GOVERNING LAW & RESOLUTION OF DISPUTES This clause specifies the law which will govern the interpretation of the Agreement. It goes on to provide for disputes to be resolved by arbitration rather than through the courts. The Chinese version contains the following text dealing with governing language, governing law and jurisdiction: “1. The governing language of this agreement is Chinese/English/other. 2. This agreement shall be governed by and interpreted in accordance with English/Chinese law. 3a. The parties will negotiate in good faith any dispute arising between them and if they cannot resolve the dispute within 15 days, either party may bring legal proceedings in the courts of [ ]; or 3b. The parties will negotiate in good faith any dispute arising between them and if they cannot resolve the dispute within 15 days, either party may commence arbitration in [Beijing, China/London, England] in accordance with the rules of the [China Arbitration Centre/ .....................]. There will be an arbitration tribunal comprising three arbitrators and the award of the arbitrators will be final.”
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