Important points that a formal agreement should cover for making misunderstandings impossible between the exporter and overseas agents are listed below:
It is very important that the relationship with the agents is clear. A formal agreement should cover the following points in a way that makes misunderstandings impossible.
1. A clear indication of who is the agent and who is the exporter and the purpose of the agreement.
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2. A clear description of the products covered by the agreement (bearing in mind that different products might be added later on).
3. A clear definition of the territory to be covered (for example, “the whole of Kenya” or “the seaboard states of the United States”).
4. The duties of the agent in terms of publicity and the publicity backup which will be provided.
5. The duties of the agent. Will the agent be merely processing orders? Or will he/she also handle import licenses and exchange control requirements? Will the agent work on a delcredere basis, e.g. guarantee that a payment will be got from the customers in return for a higher commission?
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6. Payment and payment methods. For example, what is the commission? Will the commission and any other payment be made on all orders received from the sales territory, whether they are placed through the agent or directly with the supplier?
7. The duties of the exporter (for example on prices and terms of deliver).
8. The type of market information to be supplied to the agent.
9. Who will pay for operating expenses such as those for cables, telephone calls and fax messages?
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10. The duration of the agreement and the way of cancelling it.
11. The law governing the agreement and the method of arbitration between them in the event of any dispute.s
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