What is a Commercial Agent?

I. What is a Commercial Agent?

Commercial agency is a commercial activity whereby the principal and the agent agree that the agent, in its own name, purchases or sells goods for the principal, or provides services of the principal to customers to receive remuneration.

II. Principal and Agent

1. The principal is a trader who delivers goods to an agent for sale, or provides money to an agent for the purchase of goods, or is a trader who authorizes the provision of services to a service-providing agent.

2. The agent is a trader who receives goods to act as a sales agent, receives money to act as a purchasing agent, or is the party authorized to provide services.

An agency contract must be made in writing or in other forms with equivalent legal validity.

III. Forms of Agency

1. Exclusive outright-sale agency (Bao tieu agency) is a form of agency where the agent purchases or sells an entire volume of goods, or provides a full service for the principal.

2. Exclusive agency is a form of agency where, within a specific geographical area, the principal only delivers to a single agent the purchase or sale of one or a number of specific commodities, or the provision of one or a number of specific types of services.

3. Master agency for the purchase and sale of goods and provision of services is a form of agency where the agent organizes a system of subordinate agents to undertake the purchase and sale of goods and provision of services for the principal. The master agent represents the system of subordinate agents. The subordinate agents operate under the management and in the name of the master agent.

4. Other forms of agency as agreed upon by the parties.

IV. Ownership Rights in Commercial Agency

The principal is the owner of the goods or money delivered to the agent.

V. Agency Remuneration

1. Unless otherwise agreed, agency remuneration is paid to the agent in the form of a commission or a price differential.

2. In cases where the principal fixes the purchase price or selling price of goods, or the price of service provision for customers, the agent is entitled to a commission calculated as a percentage of such purchase price, selling price, or service provision price.

3. In cases where the principal does not fix the purchase price or selling price of goods, or the price of service provision for customers, but only fixes the delivery price to the agent, the agent is entitled to the price differential. The price differential is determined as the difference between the purchase price, selling price, or service provision price for customers and the price fixed by the principal for the agent.

4. In cases where the parties have no agreement on the rate of agency remuneration, the remuneration rate shall be calculated as follows:

a) The actual remuneration rate previously paid by the parties;

b) Where point (a) of this clause is not applicable, the agency remuneration rate shall be the average remuneration rate applied to the same type of goods or services that the principal has paid to other agents;

c) Where points (a) and (b) of this clause are not applicable, the agency remuneration rate shall be the customary remuneration rate applied to the same type of goods or services on the market.

VI. Rights of the Principal

Unless otherwise agreed, the principal has the following rights:

1. To fix the purchase price, selling price of goods, or the price of agency service provision for customers;

2. To fix the delivery price to the agent;

3. To require the agent to implement security measures in accordance with the provisions of law;

4. To require the agent to make payments or deliver goods under the agency contract;

5. To inspect and supervise the performance of the contract by the agent.

Obligations of the Principal

Unless otherwise agreed, the principal has the following obligations:

1. To guide, provide information, and create favorable conditions for the agent to perform the agency contract;

2. To be responsible for the quality of goods of the goods purchase and sale agent, and the quality of services of the service-providing agent;

3. To pay remuneration and other reasonable expenses to the agent;

4. To return to the agent the assets used by the agent as security (if any) upon the termination of the agency contract;

5. To be jointly responsible for violations of the law by the agent if the cause of such violations is partly due to the principal's fault.

VII. Rights of the Agent

Unless the parties otherwise agree, the agent has the following rights:

1. To enter into agency contracts with one or more principals, except for the cases specified in Clause 7, Article 175 of this Law;

2. To require the principal to deliver goods or money under the agency contract; to receive back the assets used as security (if any) upon the termination of the agency contract;

3. To require the principal to provide guidance, information, and other relevant conditions for the performance of the agency contract;

4. To decide on the selling price of goods or provision of services to customers in the case of an exclusive outright-sale agency;

5. To enjoy remuneration and other lawful rights and interests brought about by the agency activity.

Obligations of the Agent

Unless otherwise agreed, the agent has the following obligations:

1. To purchase or sell goods, or provide services to customers at the prices of goods or prices of service provision fixed by the principal;

2. To properly perform agreements regarding the delivery and receipt of money and goods with the principal;

3. To implement measures to secure the performance of civil obligations in accordance with the provisions of law;

4. To pay the principal the proceeds from sales in the case of a sales agent; to deliver purchased goods in the case of a purchasing agent; or the money from service provision in the case of a service-providing agent;

5. To preserve goods after receipt in the case of a sales agent, or before delivery in the case of a purchasing agent; to be jointly responsible for the quality of goods of the goods purchase and sale agent, and the quality of services of the service-providing agent in cases where the agent is at fault;

6. To subject to the inspection and supervision of the principal, and to report on the agency operational situation to the principal;

7. In cases where the law specifically provides that an agent may only enter into an agency contract with one principal for a certain type of goods or service, to comply with such provisions of law.

Payment in Agency: Unless otherwise agreed, the payment for goods, service provision money, and agency remuneration shall be made in installments after the agent completes the purchase or sale of a certain volume of goods or the provision of a certain volume of services.

VIII. Term of Agency

1. Unless otherwise agreed, the term of agency shall only terminate after a reasonable period of time but not earlier than sixty days from the date on which either party notifies the other party in writing of the termination of the agency contract.

2. Unless otherwise agreed, if the principal notifies the termination of the contract in accordance with Clause 1 of this Article, the agent has the right to require the principal to pay compensation for the period during which it acted as an agent for that principal. The value of the compensation shall be one month's average agency remuneration during the period of acting as an agent for each year that the agent worked for the principal. In cases where the agency period is less than one year, the compensation shall be calculated as one month's average agency remuneration during the period of acting as an agent.

3. In cases where the agency contract is terminated based on the request of the agent, the agent shall not have the right to require the principal to pay compensation for the period during which it acted as an agent for the principal.