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UnitThirteenAgencyLearningObjectivesTodefinewhatisanagentTounderstandanagencyagreementTolearnhowtoapplyforasoleagencyGeneralViewAgencyiswidelyusednowadaysininternationaltrade.Inpracticealotofbusinessworkishandlednotonlybydirectnegotiationsbetweenbuyersandsellers,butalsobymeansofagenciesandintermediaries.Whenacompanyseekstodevelopitsmarkets,itoftenresortstothehelpofagents,whowillbeemployedtorepresentthecompanyandsellitsproductsinanareatoodistanttobeeffectivelycoveredbythecompanyitself.GeneralViewQualificationsofanagencyAnagentagreementTypesofAgency

1)Generalagent2)Soleagent/Exclusiveagent3)Broker4)Factor5)Forwardingagent

GeneralView

1.Qualificationsofanagency

theirreliabilityandfinancialsoundness;theirmarketconnectionsandtheeffectivenessoftheirsalesorganization;theirtechnicalabilitytohandlethegoodstobemarketed;thenatureandextentofotheragenciestheymayhold,andinparticularwhethertheseareconcernedwiththesaleofcompetingproducts.GeneralView2.Anagentagreement

Theagreementusuallystipulatesthecommodity,validity,territory,minimumpurchaseamount,paymenttermsfortheagentcommission,termsofprice,exclusiverightsandobligations,remedialmeasuresforbreachofthecontract,marketinformation,thegoverninglawandmethodofarbitrationintheeventofdispute,etc.GeneralView3.TypesofAgencyAccordingtothedifferentrightsandresponsibilities,theagentsmaybecategorizedintotwomaintypes:generalagencyandsole/exclusiveagency.1)Generalagent

Ageneralagentmaybeafirmorapersonwhoactsundersomedegreeofinstructionsfromhisprincipalstosellortobuygoodsonthebesttermsobtainable.Hechargesa“commission”forhisserviceundersomekindofagreementorcontract.GeneralView2)Soleagent/Exclusiveagent

Asoleagentmaybeafirmorapersonwhoactsexclusivelyforoneprincipalwithsoleorexclusiveagencyrightstosellonacommissionbasiscertaincommoditiesinacertaindistrictundersomekindofagreementorcontract.Moreover,thereareothertypesofagencieswithvaryingdegreesofauthority.

3)Broker

Abrokerisafirmorapersonwhonegotiatessalesorpurchasecontractsforbuyersandsellers,withoutrightsoftheirowninthegoods.GeneralView4)Factor

Afactorhasauthoritytosellinhisownnamefortheprincipal,toreceivepayment,andtosellattimesandpriceswhichtheyconsideradvisable.Fruits,agriculturalproductsandrawmaterialsareoftenhandledbyfactors.5)Forwardingagent

Aforwardingagentcarriesoutallthedutiesconnectedwithcollectinganddeliveringthegoods.Theservicesofaforwardingagentareparticularlyvaluableinforeigntradebecauseofthecomplicatedarrangementsthathavetobemade.Guidelinesforwriting1.Elementsofaletteraimingtoapplyforagency2.Aletteraimingtofindanagent3.ElementsofaletteraimingtograntagencyGuidelinesforwriting1.ElementsofaletteraimingtoapplyforagencyAletterwhichisintendedtoaskforagencyismadeupofthefollowingcomponents:(1)Statetheintentiondirectly(2)Offerreasonswhyheisinterestedinagency,andcompetencehehasforagency.(3)ExpectforafavorableresponseGuidelinesforwriting2.Aletteraimingtofindanagentincludesthefollowingelements:(1)selfintroduction;(2)reasonswhynewagentsareneeded;(3)theintentionoflookingforanagent;(4)expectationforaquickandfavorableresponseandgoodcooperation.Guidelinesforwriting3.Elementsofaletteraimingtograntagency

Aletterwhichgivesareplytoanapplicationusuallyconsistsofthefollowingcomponents:(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,DavidLiSpecimenletter-2(Applyingforsoleagency)April22,2008DearSirs,AttheShanghaiSpringFair,wewereimpressedbythehighquality,attractivedesignandreasonablepricesofyourtextileproducts.WehavereadyourfullcatalogueandareconvincedthatthereishereinNewYorkapromisingmarketforyourproducts.Ifyouarenotalreadyrepresentedhere,weshouldbeinterestedinactingyoursoleagent.Asleadingimportersanddistributorsofmorethantwentyyears’standinginthetextiletradewehaveagoodknowledgeoftheNewYorkmarketandhavefostered

closebusinessrelationswiththedomesticwholesalersinthisdistrict.Wefeelconfidentthatifyougiveusanyopportunitytodealinyourgoods,theresultwillbeentirelysatisfactorytobothofus.Pleaseletusknowyourquotations,therateofourcommission,andpaymentterms,sothatwemaybeginnegotiatingwithourcustomerstosecuretheirorders.Weawaityouraffirmativereply.Yoursfaithfully,WendyLeiSpecimenletter-3(Agreeingtoarequestforasoleagency)30April2008DearSirs,Wearepleasedtoreceiveyourletterofthe22ndApril,2008inwhichyouproposetorepresentusinNewYorkforthesaleofourtextileproducts.Inviewofyourexcellentperformanceinpushingthesalesofourmanufacturesandthesatisfactorybusinessrecords,wehavedecidedtoappointyouasoursoleagentfortextileproductsintheterritoryofNewYork.Wehavedrawnupadraftsoleagencyagreementinwhichthetermsandconditionsaresetforthindetails.Pleaseexamineitandtellusiftheymeetwithyourapproval.Wehopetheestablishmentofagencywillfurtherexpandthebusinesstoourmutualbenefit.Yoursfaithfully,EdwardPhillip

Specimenletter–4(Decliningarequestforasoleagency)July15,2008DearSirs,ThankyouforyourletterofJuly7,inwhichyouwouldliketobeoursoleagencydealinginourtextileproductsinNewYork.Afterseriousconsideration,wethinkthatitwouldbeprematuretocommitourselvesatthisstagewhentherecordoftransactionsshowsonlyamoderatevolumeofbusiness.WearenowonlypreparedtoenterintoaDistributorAgreementwithyou.Pleasedonotmisinterprettheaboveremark,whichinnowayimpliesdissatisfaction.Asamatteroffact,wearequitesatisfiedwiththeamountofbusinessyouhavebroughtus.Weshall,ofcourse,begladtoconsiderappointingyouasoursoleagencyatthetimewhenyourturnoverisbigenoughtojustifyestablishingtheagency.Wehopethatyouwillagreewithusonthispointandcontinuetogiveusyourcooperation.

Yoursfaithfully,MarySpecimen(SoleAgencyAgreement)SoleAgencyAgreementThisagreementisenteredintobetweenthepartiesconcernedonthebasisofequalityandmutualbenefittodevelopbusinessontermsandconditionsmutuallyagreeduponasfollows:1.Thepartiesconcerned:Supplier:ChinaNewSupplyTradeCentre,Co.,Ltd.921-923DongfangRoad,Shanghai,ChinaTelax-mail:newsupply@163.com(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,anditwillbeextendedforanother12monthsuponitsexpirationunlessnoticeisgiventothecontrary.5.ConfirmationofOrders:PartyBshallsubmitofferstootherpartiescompletelyinaccordancewiththespecificationsandtradetermsgivenbyPartyAandisallowedanyalterationwithoutPartyA’spermission.ThecommissiononeachtransactionistobefixedthroughmutualconsultationandpaidtoPartyBafterfullpaymentofthetransactionhasbeenreceivedbyPartyA.EverytransactionconcludedisbindingonlyafteritisconfirmedbyPartyAinwriting.6.ReportsonMarketConditions:PartyBshallforwardonceeverythreemonthstoPartyAdetailedreportsoncurrentmarketconditionsandofconsumer’scomments,andifthereisanyspecialchangeinthemarket,PartyBshallalsoreporttimelytoPartyAitsfullparticularsinwriting.7.Payment:Paymentistobemadebyconfirmed,irrevocableletterofcredit,withoutrecourse,availablebydraftatsightuponpresentationofshippingdocumentstothenegotiationbankin…Theletterofcreditforeachorder,whetheropenedbytheagentorbythecustomer,shallreachPartyA…daysbeforethedateofshipment.8.Otherterms&Conditions:a)Duringthevalidityofthisagreement,PartyAshallnotmakeoffersofthesaidgoodstoanypartyintheabove-mentionedterritoryotherthanPartyB,andPartyBshallguaranteenottoundertaketheagencyof,ortohandlethesaleof,thesamekindofgoodsforanyothercountries.b)PartyBmustberesponsibleforplacingordersandarrangingLs/CtobeopenedinfavorofPartyAforatleast250,000pairsforthefirstsixmonthsand250,000pairsforthesecond

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