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    Selling through Agents and Distributors

     

     
     
    © International Trade Centre, International Trade Forum - Issue 4/2002

    by Fabio Bortolotti

    Contracts involving intermediaries bring together people with diverging requirements. The International Chamber of Commerce (ICC) has made a series of contracts available that balance these conflicting interests.

    Associations representing specific types of clients tend to propose models with the best possible contractual solutions for their parties. The ICC's approach is broader, representing all those involved - principals and agents, suppliers and distributors, sellers and buyers - without favouring any of them.

    The ICC has devoted substantial efforts to drawing up model contracts involving intermediaries to ensure that they are equally acceptable to each contracting party.

    The most widely used contract forms are the ICC Model Commercial Agency Contract, the ICC Model Distributorship Contract and the Model Occasional Intermediary Contract. The Model Commercial Agency Contract applies to commercial agents who promote sales on behalf of the client. They are the most commonly used contracts for entering a new market as they imply limited costs and direct contact with customers. Occasional intermediaries also promote contracts between customers and the client, but not on a continuous basis. Distributors buy, resell and distribute products, normally on an exclusive basis, in a given territory. However, this type of agreement may create a barrier between supplier and local customers.

    One model for all countries

    The ICC model contracts apply international trade law, the "lex mercatoria", rather than domestic laws. This is because the traditional approach imposes a heavy burden on the parties involved, by forcing them to organize their contracts within a frame­work of conflicting, and often inappropriate, domestic rules. Thus a disproportionate amount of time, energy and money may be wasted checking to see if each contract conforms to local regulations.

    Reducing risks without a lawyer

    Standard contracts are in great demand by the business world, particularly for contracts of a limited economic value, which businessmen often draft themselves. Despite attempts to discourage this, many businessmen will continue to negotiate and draft international contracts without any legal assistance, increasing the need for model contracts to counteract the risk of bad drafting.

    User-friendly models

    In order to make the ICC model contracts as universally acceptable as possible, the models strike a balance between standard questions offering standard solutions and questions giving the parties a choice between several solutions. It is important to get this balance right. If there are too many alternatives, the model becomes complicated. If there are too few options, the model becomes too rigid and consequently unacceptable for those who have specific needs.

    By circulating balanced standard forms, which are user-friendly and of high quality, the ICC is making a valuable contribution to the establishment of good contractual practices in international trade.

    Fabio Bortolotti is Professor of International Commercial Law (University of Turin, Italy), partner of the law firm Studio Legale Bortolotti Mathis and Associati (Turin and Milan, Italy), Chairman of the Commission on International Commercial Practice of the ICC and Chairman of the Working Party on Model Contracts of the ICC.




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