What is the current law on commercial agency activities? In the content of this article, Lawyer X will introduce to readers the legal provisions of this issue.
Legal grounds:
Commercial Law 2005
What types of commercial agents are there?
The provisions of Article 169 of the Commercial Law 2005; stipulate the following forms of commercial agency:
+ Outsourcing agent
An Offtake agency is a form of agency in which the agent buys and sells a whole volume of goods; or provides a full service to the principal.
+ Exclusive agent
A sole proprietorship is a form of agency that is located in a certain geographical area; the principal only assigns an agent to buy and sell one or several items; or provide one or more certain types of services.
+ General agent for buying and selling goods and providing services
A general agent for the purchase and sale of goods and provision of services is a form of agency in which the agent organizes a system of affiliated agents to carry out the purchase and sale of goods and provide services to the principal.
The general agent represents the affiliated agent system. Affiliated agents operate under the management of the general agent and in the name of the general agent.
+ Other forms of agency as agreed by the parties.
How much remuneration do commercial agents receive?
According to the provisions of Article 171 of the Commercial Law 2005; Regulations on commercial agent remuneration are as follows:
Agency remuneration is paid to the agent in the form of commission or price difference; unless otherwise agreed by the parties.
In case the principal sets the purchase price; selling prices of goods or provides services to customers; the agent is entitled to a commission calculated as a percentage of the purchase price, the selling price of goods, or the price of service provision.
In case the principal does not fix the purchase and sale prices of goods; or prices for providing services to customers, but only fixes the agency delivery price to the agent; the agent will be entitled to the price difference. The price difference is determined as the difference between the buying and selling prices; the price of service provision to the customer compared with the price set by the principal for the agent.
Where the parties do not agree on the agency remuneration; The remuneration is calculated as follows:
+ The actual level of remuneration previously paid by the parties;
+ In case of Point a of this Clause is not applicable, the agency remuneration is the average level of remuneration applied to the same type of goods or services that the principal has paid to other agents;
+ In case of points a and b of this clause cannot be applied, the agency remuneration level is the normal remuneration level applied to the same type of goods and services on the market.
What rights and obligations do the parties in a commercial agency relationship have?
Rights and obligations of the principal
– Rights of the principal
Unless otherwise agreed, the principal has the following rights:
+ Fixing the purchase price, selling price of goods, and the price of providing agency services to customers;
+ Set agent delivery price;
+ Request the agent to take security measures by the law;
+ Request the agent to pay or deliver goods according to the agency contract;
+ Check and supervise the performance of the agent’s contract.
– Obligations of the principal
Unless otherwise agreed, the principal has the following obligations:
+ Guide, provide information, and create conditions for the agent to perform the agency contract;
+ Take responsibility for the quality of goods of the goods trading agent and the service quality of the service provider;
+ Pay remuneration and other reasonable expenses to the agent;
+ Return to the agent the agent’s assets used as security (if any) at the end of the agency contract;
+ Jointly take responsibility for the agency’s illegal acts, if the cause of such law violation is partly caused by its fault.
Rights and obligations of the agent
– Rights of the agent
Unless otherwise agreed by the parties, the agent has the following rights:
+ Entering into agency contracts with one or more principals, except for the case specified in Clause 7, Article 175 of this Law;
+ Request the principal to deliver goods or money according to the agency contract; receive back the assets used as security (if any) at the end of the agency contract;
+ Request the principal to guide, provide information and other relevant conditions to perform the agency contract;
+ To decide on the selling price of goods and providing services to customers, for underwriting agents;
+ To enjoy remuneration, other lawful rights, and benefits brought by agency activities.
– Obligations of the agent
Unless otherwise agreed, the agent has the following obligations:
+ Buy and sell goods or provide services to customers at the prices of goods and service provision set by the principal;
+ Strictly complying with the agreements on delivery and receipt of money and goods with the delivery agent;
+ Take measures to ensure the performance of civil obligations according to the provisions of law;
+ Paying the principal for the sale of goods for the selling agent; delivery of purchased goods to purchasing agents; service provision fees for service providers;
+ Preserve goods after receiving for selling agents or before delivering to buying agents; jointly take responsibility for the quality of goods of the goods trading agent and the service quality of the service provider in case of their fault;
+ To submit to the inspection and supervision of the principal and to report the situation of agency activities to the principal;
+ Where the law specifically stipulates that the agent may only enter into an agency contract with one principal for a certain type of goods or service; must comply with the provisions of that law.
Please see more: Conditional business lines for foreign investors in Vietnam
Frequently asked questions
The agency contract terminates from the date on which either party notifies the other party in writing of the termination of the contract; unless otherwise agreed by the parties. The agency term shall terminate only after a reasonable time but not earlier than sixty days.
The payment of goods, service provision and agent remuneration shall be made in installments; after the agent completes the purchase and sale of a volume of goods; or provide a certain volume of services; unless otherwise agreed by the parties.
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