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emphasis, yet experience has shown that it does
not always receive the attention it deserves. A
moment's reflection will show the importance of
such contractual agreements—with, as a corollary,
the dangers inherent in any lack of clarity or
definition in the terms in which they are expressed,
or any misunderstanding of these terms on either
side.
Misunderstandings
can
arise
even
between
parties in the same country who previously have
been doing business with each other on a trouble-
free basis. If this can happen in say, Ireland,
between people speaking the same language and
accustomed
to
the
same
business
practices,
obviously there is a substantially greater risk of
problems arising when an Irish exporter deals with
someone in a foreign country, where there are
different trade practices and laws as well perhaps
as a different language.
Even in the English-
speaking world, one frequently finds that particular
words and expresssions have different meanings in
one country from those attached to them in an
other, and this too can be a source of trouble.
For exporters entering into agreements with for
eign agents the moral, then, is obvious. But there
is also a lesson for those who already are parties
to such agreements. The absence of trouble in the
past is no guarantee that this state of affairs is
going to continue indefinitely — indeed, it can be
a cause of future problems by fostering a certain
casualness in business methods and procedure.
The wise exporter will therefore take a second
look at his relations with his agent, with special
reference to the contractual agreement governing
them.
First step
In appointing a foreign agent the first and most
obvious step is to check that a proposed agent
possesses the normal essential business qualifi
cations—knowledge of the trade or markets in
question, financial and personal integrity, and so
on. This, of course, is not strictly a legal matter.
But sometimes law cases can be seen to have
their roots in a lack of attention to this elementary
business prudence.
The main legal essential is for the Irish ex
porter and his proposed agent to be absolutely
clear on the terms of the proposed appointment.
These must cover matters such as —
1. Definition of the agent's territory.
2.
Is the agent to have sole representation rights
in the territory—even to the exclusion of the
exporter dealing direct with certain reserved
customers?
3.
Is the agent to have any obligations to do a
minimum amount of promotional advertising
in his territory and, if so, at whose expense?
4.
Is the agent to be authorised to enter into
firm commitments on behalf of the exporter
or will he merely seek orders which must be
referred back
to
the exporter for official
acceptance?
5. Will the agent be required to hold a stock
of goods and, if so, on what basis will these
goods be made available to him?
6. Apart from sales promotion, what further
responsibilities will
the agent have
in his
territory?
7. How is the agent to be remunerated? If on a
commission basis, is commission payable on
orders accepted by the exporter or only when
the accounts therefore have been paid by the
customers?
8.
Is
the agent
to be authorised
to collect
accounts on behalf of the exporter and receive
payments in his own name?
9. How may the appointment be terminated?
These points may seem so obvious as not to
deserve mention—yet many law cases arise simply
from the fact that the parties fail to reach clear
agreement on such elementary matters.
In writing
Once the terms of the appointment have been
settled in principle the appointment should then
be clearly set down in writing and agreed by both
parties. It may be that the negotiations for the
appointment have had to be conducted through
correspondence, and there is quite a file of letters
on the subject.
It is very important that the
official appointment should finally be made by
a single document (be it a letter or more formal
legal agreement) in which all the terms of the
appointment are set out. A series of letters can
undoubtedly amount to a
legal contract but a
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