Agreement for Sole Agency in Territory Outside the Republic Including Del Credere Liability and Provision for Consignment Stocks



A del credere agency is a type of principal-agent relationship wherein the agent acts, not only as a salesperson or broker, for the principal, but
also as a guarantor of credit extended to the buyer.

A del credere agent only becomes liable to pay the principal after the buyer defaults on payment and is not liable for any other issues that
might arise between buyer and seller.

Auction houses are the most common example of a del credere agency.

In a del credere agency, the agent will be responsible for assessing the creditworthiness of the customer and payment of the sales price.

Agency Agreements

The parties are subject to mandatory legal provisions of public policy that may apply regardless of the applicable law chosen by the parties. It
is therefore strongly recommended to check whether the foreseen agency contract will be impacted by such laws.
Whether or not agency agreements fall within the scope of Article 101(1) Treaty on the Functioning of the European Union is determined on the
basis of the financial and commercial risks borne by the agent.

In the Guidelines on Vertical Restraints the Commission has set out the criteria for the relevant financial and commercial risks. The Commission
distinguishes three types of financial or commercial risks:

(i) the contract specific risks, which directly relate to the contracts procured by the agent;

(ii) the risks related to market-specific investments, which are generally necessary to enable the agent to perform its activities
but cannot be used for other activities or, in the case of a termination of the agency agreement , can only sold at significant loss; and

(iii) risks related to other activities undertaken on the same product market to the extent that the principal requires the agent to
undertake such activities but not as an agent on behalf of the principal but for its own risk. The Commission has provided a
non-exhaustive list of risks, which must not be borne by an agent in order for the agent to be regarded as a “non-risk bearing agent.

Contribution to the costs relating to the supply / purchase of the goods, including transportation costs

An agent shall not contribute to the costs of the supply or purchase of the contract goods or services. This includes the costs for the
transportation of the goods. This does not preclude the agent from carrying out the transport service, provided that the costs are covered by the principal.

Contribution to storage costs and risks

An agent must not maintain stocks of the contract goods at his/her own cost or risk. Hence, if the agent maintains stocks of the goods, the
storage costs should be fully borne by the principal. This also includes the costs for insuring the relevant goods in stock. Further, an agent may
only be held liable for the loss of stock, if he/she is actually responsible for the loss.

Assumption of product liability

An agent should not undertake responsibility towards third parties for damage caused by the contract goods sold, unless, as agent, he/she is
responsible for the defect leading to the product liability.

Assumption of liability for the non-performance of the customer

An agent may not assume the liability for the contractual non- performance of the customer, also known as a del credere risk, with the
exception of the loss of the agent’s commission, unless the agent is liable for fault (for example, by failing to comply with reasonable security
or anti-theft measures or failing to comply with reasonable measures to report theft to the principal or police or to communicate to the principal
all necessary information available to him on the customer’s financial reliability).

Obligation to carry out sales promotion

An agent must not be obliged to invest in sales promotion or to contribute to an advertisement fund. The fact that the agent actually
does, of its own accord, invest in such advertising, in order to increase sales and its commission payments, does not lead to the application of Article 101(1) TFEU.

Investment in equipment

An agent may not make market-specific investments in equipment, premises or training of personnel, unless these costs are fully reimbursed by the principal.

Obligation to undertake other activities in same product market An agent may not undertake other activities within the same product
market required by the principal, unless these activities are fully reimbursed by the principal.

Security interest law

To provide some security for the promised payment for goods shipped within a sales transaction, the exporter, if not paid immediately or by a
letter of credit, may seek to retain title to the goods or to obtain some other form of security interest. A security interest in such a transaction
arises when the purchaser of the goods agrees that the exporter may take the goods or other identified collateral owned by the purchaser if
payment for the goods is not made as provided for under the parties’ agreement.

A security interest also provides the exporter with some assurance that if the purchaser should become insolvent or go bankrupt, the exporter may
still be able the recover the amount owed by the purchaser by taking possession of the goods or other collateral.

In an international context, the effectiveness of the parties arrangements in that respect will in general be a matter to be determined pursuant to international private law.

Del credere fee

A commission agent may guarantee to the principal the performance by a third party under a contract entered into by the agent with such third
party. This agent’s guarantee is provided in the form of del credere, a written agreement between the agent and the principal (or a special
clause in the agency agreement) providing for such a guarantee.

The principal pays to the agent a del credere fee (in addition to the agency fee) in the amount agreed upon between the parties. In the
event of the absence of such an agreement, this fee is defined based on fair market fees.