RIGHTS AND OBLIGATIONS OF THE PARTIES IN THE COMMERCIAL AGENCY

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

Normally, in commercial agency have principals and agents. Principals are traders that deliver goods to agents for sale or provide money to agents for purchase of goods, or traders that authorize the provision of services to service-providing agents. Agents are traders that receive goods to act as sale agents or receive money to act as purchase agents or accepts the authorization to provide services.

1. Rights and obligations of principals

1.1 Rights of principals

Unless otherwise agreed, principals shall have the following rights:

(i) To fix prices of goods purchased or sold or charge rates of services provided to customers under agency;

(ii) To fix agency prices;

(iii) To request agents to take security measures as provided for by law;

(iv) To request agents to make payments or deliver goods under agency contracts; and

(v) To inspect and supervise the performance of contracts by agents;

1.2 Obligations of principals

Unless otherwise agreed, principals shall have the following obligations:

(i) To guide, supply information to, and facilitate, agents to perform agency contracts;

(ii) To bear responsibility for quality of goods of goods sale or purchase agents, and quality of services of service-providing agents;

(iii) To pay remuneration and other reasonable expenses to agents;

(iv) To return to agents their assets used as security (if any) upon the termination of agency contracts; and

(v) To bear joint responsibility for law violation acts of agents if such law violation acts are partly attributable to their faults.

2. Rights and obligations of agents

2.1 Rights of agents

Unless otherwise agreed by the parties, agents shall have the following rights:

(i) To enter into agency contracts with one or more principals, except for cases specified in Clause 7, Article 175 of Commercial Law 2005;

(ii) To request principals to deliver goods or money under agency contracts; to take back assets used as security (if any) upon the termination of agency contracts;

(iii) To request principals to guide, supply information and create other related conditions for the performance of agency contracts;

(iv) To decide on goods sale prices or service charge rates for customers, for off-take agents; and

(v) To enjoy remunerations and other lawful rights and interests brought about by agency activities.

2.2 Obligation of agents

Unless otherwise agreed, agents shall have the following obligations:

(i) To purchase or sell goods or provide services to customers at prices or charge rates fixed by principals;

(ii) To comply strictly with agreements on handover and receipt of money and goods with principals;

(iii) To take security measures for performance of civil obligations as provided for by law;

(iv) To pay to principals any proceeds of the sale of goods, for sale agents; to deliver purchased goods to principals, for purchase agents; or to pay service charges to principals, for service-providing agents;

(v) To preserve goods after the receipt thereof, for sale agents, or prior to the delivery thereof, for purchase agents; to bear joint responsibility for quality of goods of purchase or sale agents or quality of services of service-providing agents in cases where they are at fault;

(vi) To submit to inspection and supervision by principals, and to report to principals on their agency activities;

(vii) Where it is specified by law that an agent shall be allowed to enter into an agency contract with a principal for a certain type of goods or service, such provision of law must be complied with.

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