Reading 4: Commercial agency contract1
The ICC2 Model Commercial Agency Contract is commonly used by businesses entering a
new market, and is an example of a standard form3 contract. Its provisions are based on
prevailing practice in international trade rather than national laws.
21 What are the advantages of using a standard form contract based on common
business practices rather than negotiating contracts according to domestic laws?
22 What kind of provisions would you expect to find in a commercial agency
contract?
23 Chance Computing is a UK-based company that produces budget laptop
computers for schoolchildren. It uses agents to sell its products to other
countries. Read the clauses on the next page taken from Chance Computing’s
standard commercial agency contract and answer these questions.
1 Can the agent set the price at which goods will be sold to third parties?
2 Under what circumstances can the contract be terminated?
3 What is the governing law?
4 If the principal breaches the contract, what court has jurisdiction?
1 also commercial agency agreement
2 The International Chamber of Commerce is an organisation of businesses from over
80 countries that works to promote and support global trade and globalisation
3 also boilerplate
new market, and is an example of a standard form3 contract. Its provisions are based on
prevailing practice in international trade rather than national laws.
21 What are the advantages of using a standard form contract based on common
business practices rather than negotiating contracts according to domestic laws?
22 What kind of provisions would you expect to find in a commercial agency
contract?
23 Chance Computing is a UK-based company that produces budget laptop
computers for schoolchildren. It uses agents to sell its products to other
countries. Read the clauses on the next page taken from Chance Computing’s
standard commercial agency contract and answer these questions.
1 Can the agent set the price at which goods will be sold to third parties?
2 Under what circumstances can the contract be terminated?
3 What is the governing law?
4 If the principal breaches the contract, what court has jurisdiction?
1 also commercial agency agreement
2 The International Chamber of Commerce is an organisation of businesses from over
80 countries that works to promote and support global trade and globalisation
3 also boilerplate
3 The Agent shall endeavour to obtain business for the Principal and
is bound to serve the interests of the said Principal to the best of his
ability. He will do his best to provide all information necessary for the
purpose of promoting business, and especially inform the Principal
immediately about every order received.
4 He may not deviate from the prices, delivery and payment conditions
of the Principal without his consent.
9 The contract shall come into force on 10 February 2006 and shall be
valid for an indefi nite period.
Where the contract has been agreed for a fi xed period, it shall be
expected for the same period provided that notice of termination shall
not have been served, by registered letter, at least six months prior to
the end of a calendar quarter.
Where the contract has been agreed for an indefi nite period, it may
be terminated by either party thereto giving, by registered letter, six
months’ notice prior to the end of a calendar quarter.
10 The provisions of the EEC Council Directive of 18 December 1986
on the co-ordination of the laws of the Member States relating to
self-employed agents (86/653/EEC) apply to this agreement. In other
respects, the law of the domicile of the Agent is to be consulted.
11 Any disputes arising out of or in connection with this agreement shall
be decided by the competent Court in the area where the claimant
has his residence or registered offi ces.
24 Take it in turns with a partner to explain the provisions of the contract using
your own words.
EXAMPLE: Clause 4 says that the agent needs permission from the principal
to change prices and conditions of sale, etc.
is bound to serve the interests of the said Principal to the best of his
ability. He will do his best to provide all information necessary for the
purpose of promoting business, and especially inform the Principal
immediately about every order received.
4 He may not deviate from the prices, delivery and payment conditions
of the Principal without his consent.
9 The contract shall come into force on 10 February 2006 and shall be
valid for an indefi nite period.
Where the contract has been agreed for a fi xed period, it shall be
expected for the same period provided that notice of termination shall
not have been served, by registered letter, at least six months prior to
the end of a calendar quarter.
Where the contract has been agreed for an indefi nite period, it may
be terminated by either party thereto giving, by registered letter, six
months’ notice prior to the end of a calendar quarter.
10 The provisions of the EEC Council Directive of 18 December 1986
on the co-ordination of the laws of the Member States relating to
self-employed agents (86/653/EEC) apply to this agreement. In other
respects, the law of the domicile of the Agent is to be consulted.
11 Any disputes arising out of or in connection with this agreement shall
be decided by the competent Court in the area where the claimant
has his residence or registered offi ces.
24 Take it in turns with a partner to explain the provisions of the contract using
your own words.
EXAMPLE: Clause 4 says that the agent needs permission from the principal
to change prices and conditions of sale, etc.
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