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The INTERNATIONAL SALES COMMISSION AGREEMENT regulates the relations between a person or a company, Agent, which manages the sales for a company, Principal, which supplies products and which wishes to move into international markets.

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  1. 1. INTERNATIONAL SALES COMMISSION AGREEMENT 1. Definition 2. Parties to the Agreement 3. Main clauses and sample 3.1 Territory and exclusivity 3.2. Calculation of commission 3.3 Commission payment 3.4 Negotiation margin 3.5. Compensation 4. Law applicable 5. Model Agreement
  2. 2. The International Sales Commission Agreement regulates the relations between a person or a company (Agent) which manages the sales for a company (Principal) which supplies products and which wishes to move into international markets. The Agent offers products to potential clients in an assigned territory (usually a country), strictly in accordance with the sale conditions indicated to it by the Principal. The Agent’s remuneration is only through a commission which is established as a percentage on the sales made and effectively collected by the Principal. 1. DEFINITION
  3. 3. The Principal is always a company but the Agent can be a company or a person (independent professional). For each party, the following has to be included: • Name of company, full address and nationality. • Company type: public limited company, limited liability company, etc. • Name and position of company representative who signs the agreement. • Name, profession, full address and nationality of person who acts as Representative. • Tax ID number of both parties. 2. PARTIES TO THE AGREEMENT
  4. 4. Some of the most important clauses in the International Sales Commission Agreement are as follows: • Territory and exclusivity. • Calculation of commission. • Commission payment. • Negotiation margin. • Compensation. 3. MAIN CLAUSES AND SAMPLE See sample International Sales Commission Agreement
  5. 5. “The territory assigned by the Principal to the Agent for the promotion and sale of the products is ........................ [insert territory: country or countries, regions, etc.].” “The Principal exclusively grants the Agent the right to promote and sell the products in the assigned territory. The Agent shall be entitled to receive the commission stipulated in clause 3 of this Agreement for all the sales it carries out in the assigned territory during the period this Agreement is in force.” 3.1 TERRITORY AND EXCLUSIVITY See sample International Sales Commission Agreement
  6. 6. 3.2 CALCULATION OF COMMISSION “The Principal agrees to pay the Agent, in exchange for the services rendered, a commission of ...... % [insert commission, usually between 5% and 10% of the value of sales carried out]. The commission percentage established in this clause cannot be modified by the Parties, unless it is mutually agreed in writing.” “The amount of the commission will be calculated on the net value of sales, in other words, the price in invoices of products sold by the Agent, without including additional expenses (packaging, transport and insurance), or taxes, provided that the aforesaid expenses and taxes are indicated separately in the invoice.” See sample International Sales Commission Agreement
  7. 7. 3.3 COMMISSION PAYMENT “The commission will always be paid upon the previous payment by the clients to the Principal for the amount of the sales. Alternative A. “The commissions shall be settled, on a transaction by transaction basis, and shall be paid within a period of ......... [10, 20, 30, 60] calendar days counting from the date of the client’s payment to the Principal.” Alternative B. “The commissions shall be settled in groups and shall be paid ............. [monthly, quarterly, annually] on the last day of the corresponding period.” See sample International Sales Commission Agreement
  8. 8. 3.4 NEGOTIATION MARGIN “In negotiations with clients, the Agent will have a negotiating margin of .......% [3, 5, 10, 20] on the prices of the products established by the Principal. Accordingly, the Agent can propose discounts within these margins to its clients, without the prior authorization of the Principal, without reducing its commission.” See sample International Sales Commission Agreement
  9. 9. 3.5 COMPENSATION “TheAgentshallnotbeentitledtocompensationforgoodwillintheevent of cancellation of the Agreement, although it shall be entitled to claim for damages,if thecancellationbythePrincipalentailsabreachof agreement and is not set forth in this Agreement.” “For the purposes of compensation for cancellation of agreement, laws concerning Agency or Sales Representative Agreements shall not be applicable to this Agreement.” See sample International Sales Commission Agreement
  10. 10. International Law standards are not applied to this type of Agreement. The parties are free to submit any conflicts regarding the agreement to International Arbitration or to the Laws of the country of one of the parties. They will normally be subject to the Laws of the country of the Principal. 4. Applicable Law See sample International Sales Commission Agreement
  11. 11. In order to obtain the model contract in Word format and the user guide, click on: International Sales Commission Agreement 5. MODEL CONTRACT