Agent,Distribution and Consignment

Internaitonal trade forms refer to the common practices and channels between countries for the flow of commodities or serves.Every import or export is carries out through certain trade form.Besides the direct trade form discussed in this book so far,there are a few indirect ones commonly used in international trade as well.Some of the most commonly used ones are discussed in the last chapters.

1.Agent
And agent is a middleman who can act on behalf of a principal in specific matters. Many kinds of agent are active in international business nowadays,such as forwarding agents and clearing agents.What we will discuss here is selling agent.According to the power the pricipal has delegated to a selling agent,the agent may just introduce the potential customer to the principal or actually negotiates and concludes the contract between parties. They have the following characteristics:
*An agent can only operate within the marketing territory authorized by the principal.
*An agent does not carry stock.The goods are carried only as consignment inventory.Payment is based on delivery to the ultimate buyer.
*The principal (exporter) set the retail price,retains title and controls the goods
*The profit and risk of loss remains with the principal,unless the agent is a del credere one (保付代理）
*Agents are usually paid by commission.

According to the scope of their authority,agents can be divided into several kins:

(1)Indenting Agent
And indenting agent is the agent (exclusive or non-exclusive) appointed by a principal for marketing and promoting the products from the potential customers within the territory. He needs to solicit inquiries for the products from potential customers in the territory.He will transmit them back to the principal who will then decide whether to accep the particular inquiries,and upon what terms. Depending on the exact scope of his duties,the agent may or may not take part in the negotiation and conclusion of the contracts resulting from the inquiries.

(2) Factor
A factor is approved with the power to negotiate and conclude contracts in the territory no behalf of his principal.A factor may have a stock of the products,which will belong to the principal but will enable the factor to satisfy the contract that he negotiate.

(3) Del Credere Agent
A del credere agent is the agent who takes responsibiliey for credit risks. If the buyer he introduces fails to pay the principal or breaks the contract,it is the agent's resposibility to cover the loss. Usually,del credere agents charge a higher commission.
Responsibilities of the agent:
*Serve the principal as an agent on the terms of the agreement between them with all due and proper diligence.
*Maintain and provide necessary facilities at his own expense.
*Pass all marketing information to the principal.
*Comply with all laws and regulations in the territory.
*Keep confidential to the principal,not diclosing any useful information to any third party
*Not to act outside the territory.

Responsibilities of the principal:
*Supply to the agent free of charge a reasonable quantity of sales literature
*Supply necessary models or samples relating to the products
*Not submit offers nor effects sales in the territory without the agent's consent
*Responsibility to pay for the necessaryt expenses of the agent
*Pay commission to the agent in accordance with the agreement

2.Distrubution
Unlike agents, distributors buy goods for the principals on their own account and take title to them and resell them to their customers in their territory.Thus,there is no contractual relationship between the principal and the ultimate customers.Instead there are separate sets contracts:those between the principal and the distributor, and those between the distributor and the ultimate customers.The distributor takes his remuneration from the margin between the prices at which he buys the products and the prices at which he sells them to the customers.Since the distributor is an independent contractor,he assumes far more risks and obligations than an agent does:bad debts,advertising expenditure,warranty claims and maintenance,etc.Therefore,distributor generally enjoy more freedom and higher remuneration.
Two kinds of distributors are generally used (named):
*Sole or exclusive distributor
He is the only distributor in a territory.
*Non-exclusive distributor
There may be several non-exclusive distributors appointed by the principal or supplier in one territory.

Generaly undertaking by the distributor:
*Serve the principal diligently and faithfully during the continuance of the agreement in the territory.
*Not to do anything that may prevent the sale or interfere with the development of sales of the products in the territory,such as dealing with competing goods.
*Conform to all legislation rules and requirements existing in the territory
*Proper storage of the products
*Not to copy the procuct or any part of them for any other purpose
*Keep patent and trade mark notices
*Not to sell outside or export the product from the territory unless there is consent of the principal
*Provide the principal with sales report periodically

General undertaking by the principal:
*Refer all inquiries received from the territory to the distributor.
*Sell the products to the distributor with the lowest price charged at that time to any export customers of the principal
*Reserve the right to improve or modify the products with prior notice

3.Consignment