Suitable where a company in one territory appoints a representative in another territory for the purpose of obtaining and forwarding tender invitations in return for a fee, with provisions for joint tendering.
Here the representative’s activities are concentrated on providing the client with tender information and if matters work out, the representative might become the local agent or even partner of the client.
This six page document contains 12 main clauses covering
- commencement and duration
- duties of representative
- representative’s fees and expenses
- local participation
- relationship of parties
- assignment and subcontracting
- communication and notices
- governing law and resolution of disputes
You need this contract if you want to appoint a representative in another country to obtain and forward tender invitations, and want clarity about the duties the representative will undertake.
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This Agreement is between a Client in one country which wishes to appoint a Representative in another country 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:
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 – initially to expire at the end of the first year and thereafter on 3 months notice 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 includes registering the Client with relevant government and other departments that issue tender invitations and forwarding tender documents to the Client, plus such other services as the Client may reasonably request.
Clause 3.2 assumes that the Client will visit the Territory from time to time and that the Representative will look after visas and hotel accommodation as well as setting up meetings with prospective customers.
Clause 3.3 imposes a ‘good faith’ obligation on the Representative. The agreement does not contain a clause prohibiting the Representative from acting for competitors of the Client and if this is required, extra wording could be inserted here.
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 incurred. 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 clause 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. The fee amount is to be agreed on a case by case basis.
In clause 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.
In many countries, a foreign company which wishes to do business needs to have a local agent or partner. This clause 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 clause 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
This clause gives the Representative the right to be considered for the role of local agent if the Client decides to set up in the Territory but does not bind the Client to appoint the Representative. Note also in some 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.
The nature of the Agreement is such that confidentiality is clearly required and this is specified here.
UK company appointing a Representative may want to add a clause requiting the Representative to comply with its Code of Conduct: under the UK’s Bribery Act, a company can be liable to prosecution in the UK if an overseas representative bribes an official, and it is going to be important to guard against these risks. A typical clause might read:
“The Representative acknowledges that it has been supplied with a copy of the Client’s Code of Conduct and undertakes with the Client to abide by its terms and not to act or permit any of its personnel to act in any manner that is in contravention of the Code of Conduct.”
9. ASSIGNMENT AND SUBCONTRACTING
A standard clause – this is a personal arrangement and assignment and subcontracting would not be appropriate without consent.
In addition to the provisions of clause 2.2, either party can terminate if the other is in breach of the agreement 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.