It is estimated that about 50 percent of global trade is handled through overseas agents and distributors. Laws governing agents and distributors are complex and vary from country to country. In certain countries, protective legislation favors local representatives with respect to such matters as market exclusivity and duration or termination of contracts. In the event of termination without good cause, for example, a Belgian distributor is entitled to an indemnity.
Similar laws exist in France, Germany, and other countries. In Germany, maximum compensation payable to agents usually equals one year’s gross commissions based on an average over the previous five years or the period of existence of the agency, whichever is shorter. In countries such as Egypt, Indonesia, Japan, and South Korea, representation agreements must be formally registered with and their contents approved by the appropriate authority. In many Latin American countries, local law governs service contracts if the services are to be performed in local jurisdictions, and any representative agreement that is not in conformity with local law will be invalid and unenforceable. Thus, it is important that in the negotiation and drafting of such agreements, sufficient attention be given to the impact of local laws and other pertinent issues
Source: Seyoum Belay (2014), Export-import theory, practices, and procedures, Routledge; 3rd edition.
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