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UnitThirteen,Agency,LearningObjectives,TodefinewhatisanagentTounderstandanagencyagreementTolearnhowtoapplyforasoleagency,GeneralView,Agencyiswidelyusednowadaysininternationaltrade.Inpracticealotofbusinessworkishandlednotonlybydirectnegotiationsbetweenbuyersandsellers,butalsobymeansofagenciesandintermediaries.Whenacompanyseekstodevelopitsmarkets,itoftenresortstothehelpofagents,whowillbeemployedtorepresentthecompanyandsellitsproductsinanareatoodistanttobeeffectivelycoveredbythecompanyitself.,GeneralView,QualificationsofanagencyAnagentagreementTypesofAgency1)Generalagent2)Soleagent/Exclusiveagent3)Broker4)Factor5)Forwardingagent,GeneralView,1.Qualificationsofanagencytheirreliabilityandfinancialsoundness;theirmarketconnectionsandtheeffectivenessoftheirsalesorganization;theirtechnicalabilitytohandlethegoodstobemarketed;thenatureandextentofotheragenciestheymayhold,andinparticularwhethertheseareconcernedwiththesaleofcompetingproducts.,GeneralView,2.AnagentagreementTheagreementusuallystipulatesthecommodity,validity,territory,minimumpurchaseamount,paymenttermsfortheagentcommission,termsofprice,exclusiverightsandobligations,remedialmeasuresforbreachofthecontract,marketinformation,thegoverninglawandmethodofarbitrationintheeventofdispute,etc.,GeneralView,3.TypesofAgencyAccordingtothedifferentrightsandresponsibilities,theagentsmaybecategorizedintotwomaintypes:generalagencyandsole/exclusiveagency.1)GeneralagentAgeneralagentmaybeafirmorapersonwhoactsundersomedegreeofinstructionsfromhisprincipalstosellortobuygoodsonthebesttermsobtainable.Hechargesa“commission”forhisserviceundersomekindofagreementorcontract.,GeneralView,2)Soleagent/ExclusiveagentAsoleagentmaybeafirmorapersonwhoactsexclusivelyforoneprincipalwithsoleorexclusiveagencyrightstosellonacommissionbasiscertaincommoditiesinacertaindistrictundersomekindofagreementorcontract.Moreover,thereareothertypesofagencieswithvaryingdegreesofauthority.3)BrokerAbrokerisafirmorapersonwhonegotiatessalesorpurchasecontractsforbuyersandsellers,withoutrightsoftheirowninthegoods.,GeneralView,4)FactorAfactorhasauthoritytosellinhisownnamefortheprincipal,toreceivepayment,andtosellattimesandpriceswhichtheyconsideradvisable.Fruits,agriculturalproductsandrawmaterialsareoftenhandledbyfactors.5)ForwardingagentAforwardingagentcarriesoutallthedutiesconnectedwithcollectinganddeliveringthegoods.Theservicesofaforwardingagentareparticularlyvaluableinforeigntradebecauseofthecomplicatedarrangementsthathavetobemade.,Guidelinesforwriting,1.Elementsofaletteraimingtoapplyforagency2.Aletteraimingtofindanagent3.Elementsofaletteraimingtograntagency,Guidelinesforwriting,1.ElementsofaletteraimingtoapplyforagencyAletterwhichisintendedtoaskforagencyismadeupofthefollowingcomponents:(1)Statetheintentiondirectly(2)Offerreasonswhyheisinterestedinagency,andcompetencehehasforagency.(3)Expectforafavorableresponse,Guidelinesforwriting,2.Aletteraimingtofindanagentincludesthefollowingelements:(1)selfintroduction;(2)reasonswhynewagentsareneeded;(3)theintentionoflookingforanagent;(4)expectationforaquickandfavorableresponseandgoodcooperation.,Guidelinesforwriting,3.ElementsofaletteraimingtograntagencyAletterwhichgivesareplytoanapplicationusuallyconsistsofthefollowingcomponents:(1)Acknowledgereceiptoftheapplication.(2)Makeadecision:acceptanceordeclination(3)Iftheresponseispositive,expressexpectationsforgoodcooperation.(4)Iftheresponseisnegative,declinetheapplicationpolitely.Andanexplanationandagoodwisharenecessary.,SpecimenLetter-1(Seekinganagency)June5,2007DearMr.Benson:WeareamobilephonemanufacturerwithacompanybasedinJapanandfactoriesinChina.OurmajorpurchaserscomefromEuropeandSoutheastAsia.WeareplanningtoexpandourbusinesstotheU.S.Aandyouhavebeenhighlyrecommendedtousashavingbeenmostsuccessfulinmarketingmobilephones.Wewouldliketoaskifyouareinterestedinrepresentingus.Weencloseacatalogueandexportpricelistsothatyoucanseethewiderangeofourproducts.Yourpromptreplyishighlyappreciated.Yoursfaithfully,DavidLi,Specimenletter-2(Applyingforsoleagency)April22,2008DearSirs,AttheShanghaiSpringFair,wewereimpressedbythehighquality,attractivedesignandreasonablepricesofyourtextileproducts.WehavereadyourfullcatalogueandareconvincedthatthereishereinNewYorkapromisingmarketforyourproducts.Ifyouarenotalreadyrepresentedhere,weshouldbeinterestedinactingyoursoleagent.AsleadingimportersanddistributorsofmorethantwentyyearsstandinginthetextiletradewehaveagoodknowledgeoftheNewYorkmarketandhavefostered,closebusinessrelationswiththedomesticwholesalersinthisdistrict.Wefeelconfidentthatifyougiveusanyopportunitytodealinyourgoods,theresultwillbeentirelysatisfactorytobothofus.Pleaseletusknowyourquotations,therateofourcommission,andpaymentterms,sothatwemaybeginnegotiatingwithourcustomerstosecuretheirorders.Weawaityouraffirmativereply.Yoursfaithfully,WendyLei,Specimenletter-3(Agreeingtoarequestforasoleagency)30April2008DearSirs,Wearepleasedtoreceiveyourletterofthe22ndApril,2008inwhichyouproposetorepresentusinNewYorkforthesaleofourtextileproducts.Inviewofyourexcellentperformanceinpushingthesalesofourmanufacturesandthesatisfactorybusinessrecords,wehavedecidedtoappointyouasoursoleagentfortextileproductsintheterritoryofNewYork.Wehavedrawnupadraftsoleagencyagreementinwhichthetermsandconditionsaresetforthindetails.Pleaseexamineitandtellusiftheymeetwithyourapproval.Wehopetheestablishmentofagencywillfurtherexpandthebusinesstoourmutualbenefit.Yoursfaithfully,EdwardPhillip,Specimenletter4(Decliningarequestforasoleagency)July15,2008DearSirs,ThankyouforyourletterofJuly7,inwhichyouwouldliketobeoursoleagencydealinginourtextileproductsinNewYork.Afterseriousconsideration,wethinkthatitwouldbeprematuretocommitourselvesatthisstagewhentherecordoftransactionsshowsonlyamoderatevolumeofbusiness.WearenowonlypreparedtoenterintoaDistributorAgreementwithyou.,Pleasedonotmisinterprettheaboveremark,whichinnowayimpliesdissatisfaction.Asamatteroffact,wearequitesatisfiedwiththeamountofbusinessyouhavebroughtus.Weshall,ofcourse,begladtoconsiderappointingyouasoursoleagencyatthetimewhenyourturnoverisbigenoughtojustifyestablishingtheagency.Wehopethatyouwillagreewithusonthispointandcontinuetogiveusyourcooperation.Yoursfaithfully,Mary,Specimen(SoleAgencyAgreement)SoleAgencyAgreementThisagreementisenteredintobetweenthepartiesconcernedonthebasisofequalityandmutualbenefittodevelopbusinessontermsandconditionsmutuallyagreeduponasfollows:1.Thepartiesconcerned:Supplier:ChinaNewSupplyTradeCentre,Co.,Ltd.921-923DongfangRoad,Shanghai,ChinaTelax-mail:newsupply(HereinaftercalledPartyA)Agent:M/S.TaylorIndustriesLtd.1241LongBeachStreet,LosAngelesCA90025,Tel:213-6660068Fax:213-66600898E-mail:talor(HereinaftercalledPartyB)PartyAherebyappointsPartyBtoactasitsSoleAgenttosellthecommoditymentionedbelow.2.CommodityandQuantity:BronzeplatedIronSquareHingeswithScrews.ItismutuallyagreedthatPartyBshallundertakethesalesoftheafore-saidcommodityfornotlessthan500,000pairsinthedurationoftheagreement.3.Territory:LosAngeles,U.S.A.4.ValidityofAgreement:Thisagreementwhendulysignedbythepartiesconcernedshallremaininforcefor12calendarmonthstobeeffectivefromNovember1st,1994toOctober31st,1995,anditwillbeextended,foranother12monthsuponitsexpirationunlessnoticeisgiventothecontrary.5.ConfirmationofOrders:PartyBshallsubmitofferstootherpartiescompletelyinaccordancewiththespecificationsandtradetermsgivenbyPartyAandisallowedanyalterationwithoutPartyAspermission.ThecommissiononeachtransactionistobefixedthroughmutualconsultationandpaidtoPartyBafterfullpaymentofthetransactionhasbeenreceivedbyPartyA.EverytransactionconcludedisbindingonlyafteritisconfirmedbyPartyAinwriting.6.ReportsonMarketConditions:PartyBshallforwardonceeverythreemonthstoPartyAdetailedreportsoncurrentmarketconditionsandofconsumerscomments,andifthereisanyspecialchangeinthemarket,Party,BshallalsoreporttimelytoPartyAitsfullparticularsinwriting.7.Payment:Paymentistobemadebyconfirmed,irrevocableletterofcredit,withoutrecourse,availablebydraftatsightuponpresentationofshippingdocumentstothenegotiationbankinTheletterofcreditforeachorder,whetheropenedbytheagentorbythecustomer,shallreachPartyAdaysbeforethedateofshipment.8.Otherterms&Conditions:a)Duringthevalidityofthisagreement,PartyAshallnotmakeoffersofthesaidgoodstoanypartyintheabove-mentionedterritoryotherthanPartyB,andPartyBshallguaranteenottoundertaketheagencyof,ortohandlethesaleof,thesamekindofgoodsforanyothercountries.,b)PartyBmustberesponsibleforplacingordersandarrangingLs/CtobeopenedinfavorofPartyAforatleast250,000pairsforthefirstsixmonthsand250,000pairsforthesecondsixmonthsofthedurationofthisagreement.ShouldPart
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