CHAPTER XXVII OVERSEAS AGENTS/ DISTRIBUTORS & AGENCY AGREEMENTS

1. CHAPTER XXVII OVERSEAS AGENTS/ DISTRIBUTORS & AGENCY AGREEMENTS • International Partner Search Service • Agency Agreement With a U.S. Manufacturer • Agency Agreement With an Overseas Agent Copyright(c) 2012 Dr. Chase C. Rhee

2. Overseas Agents/Distributors • Agents & Distributors are essential • Time & cost for locating reliable agents and distributors are too high for small businesses. • One of reasons why most U.S. manufacturers are not engaged in export business Copyright(c) 2012 Dr. Chase C. Rhee

3. International Partner Search Service • U.S. Commercial Service of USDC locates the most suitable agents, distributors, joint-venture partners, licensees & provides up to 5 prequalified partners • This service • Saves time and money for a U.S. firm by working only with pre-qualified partners • Obtains market information on marketability and sales potential • Receives complete contact information on key officers and on the companies, and a statement from each potential partner on the marketability of U.S firm’s products or services • Gets all information within 30 business days Copyright(c) 2012 Dr. Chase C. Rhee

4. Agency Agreement with U.S. Manufacturer • Manufacturer’s appointment of an EMC as an exclusive sales agent or export department for a certain territory: all foreign countries or a few countries • Compensation: Commission or salary, salary plus comm. • EMC’s right to appoint overseas agents and distributors • EMC’s minimum performance requirement • Jurisdictional clause • Arbitration clause • Contract period • Contract termination clause Copyright(c) 2012 Dr. Chase C. Rhee

5. Agency Agreement with Overseas Agent • ICC Model Commercial Agency Contract: ICC Publication No. 644 • Agent shall not have business dealings with competitive firms. • Not reveal any confidential information in a way that would prove injurious, detrimental, or competitive to the U.S. firm. • Not enter into agreements binding the U.S. firm without prior approval. Copyright(c) 2012 Dr. Chase C. Rhee

6. Agency Agreement with Overseas Agent • Refer all inquiries received from outside designated sales territory to the U.S. firm. • Apply the utmost skill and ability to the sale of the product for the compensation stated in the contract. • Meet the minimum sales requirement per year. • Jurisdictional clause Which country’s or State’s law to govern the agency contract Copyright(c) 2012 Dr. Chase C. Rhee

7. Agency Agreement with Overseas Agent • Arbitration clause • Settlement of future possible disputes • American Arbitration Rules • ICC Arbitration Rules • Contract termination clause • Contract terms: How many years? • Just causes for termination before expiry date Copyright(c) 2012 Dr. Chase C. Rhee

8. Agency Agreement with Overseas Agent • Foreign laws restraining termination of Agency Agreements: • Foreign countries’ national laws giving extraordinary protection to U.S. Firms’ foreign agents or distributors at the expense of the principals and making termination of the contract difficult or costly without legal justification. • Goodwill indemnity: One year’s potential commission for 5-year agency contract in EU countries Copyright(c) 2012 Dr. Chase C. Rhee