International Sales—Importing and Exporting
International sales are generally handled three (3) different ways. Those are direct sales from a company, the employment of a foreign agent or contracting with a foreign distributor. A foreign distribution agreement is the most effective and safest method of exporting for most companies. There are many similarities between an agency agreement and a distribution agreement.
Distribution Agreements
Distribution agreements and agency agreements need to cover the following issues; the territory in which the distributor will operate; the method of payment or security for payment for the goods; the right of the manufacturer or master distributor to terminate the agreement; how much notice is required for termination; what are the rights of the distributor upon termination; what are the rights and powers of the manufacturer or master distributor on termination; whether the distributor can import into his country after termination; whether the distributor can export from his country territory after termination; the duration of the agreement and what law controls the agreement. A very important question that must be answered is where is jurisdiction and whether a court or arbitrator will handle disputes. It is not uncommon for sole jurisdiction to be in the state of the manufacturer or master distributor.
There have been three (3) basic undertakings to unify the rules of agency and distribution. One of these is the 1983 Geneva Convention on Agency in the International Sales of Goods. One is the European Union Unification of the rules effecting agents and distributors and the third, the adoption by the International Chamber of Commerce of a model agency agreement and a model distribution agreement.
Export and Import Laws and Treaties
The export laws of some countries will restrict or place specific requirements upon reporting the sale of goods from that country. Many countries will control and tax the importation of goods into their countries. Serious consideration must be given in preparing a distribution plan to the World Trade Organizations Requirements and the treaties affecting trade between various individual countries bi-lateral treaties (one on one) and between groups of countries (multi-lateral treaties)
Commercial Laws
In many countries of the world The Code, based on Roman, French and German law prevails and controls how commerce is done between the peoples within that area. Unless there is an agreement between two states (countries) to the contrary, the Code there will control commerce. In the United States of America, a common law country, the Uniform Commercial Code (UCC) has been adopted state by state. In the United States the UCC controls commerce. However, the principal controlling agreement throughout the world is the United Nations Convention on the International Sale of Goods. More than sixty (60) countries, including most of the industrialized world, have adopted the Convention on the International Sale of Goods (CISG). The United Kingdom has not yet joined CISG. Where CISG has been adopted between two countries, in which contracting parties are located, CISG controls on the sale of goods unless it is specifically excluded by the contract if the goods are not bought for personal household use, investment securities, ships, vessels, hovercraft, aircraft, or electricity. The mere selection of law of a country to control the contract without explicitly stating that CISG will not apply does not properly exclude the application of CISG. If CISG is not excluded and the contract fails to cover a particular matter which becomes at issued, Article 7(2) of CISG requires that the general principles of international or normal choice of law rules would apply. The determination of whether to exclude CISG should be made a upon consultation with counsel and with a review of the nations involved, methods of sale, methods of payment and product.
Most Troublesome Problem Upon Termination
When a distributorship is terminated against the will of the distributor it is necessary that the contract has been careful drawn to support that termination to the greatest extent possible. The laws of many countries have been developed to protect the distributors located within those countries and some countries have distinguished between agents and distributors giving much more protection to agents. Brazil is a good example of that enhanced protection for agent.
Export and Import Laws
Finally it is necessary to take into countries involved affecting exports and imports. As an example the United States significantly controls the export of arms and the definition of arms, not only include weapons, but many other products. Many countries significantly tax imports. Those taxes are based upon the price of the goods so some distributors will seek to use a two invoice system or false invoices. Such documentation intended to deprive the importing company of revenue violate the laws of that country and in most instances would violate the laws of the United States as an exporting country.
Hendry, Stoner, Calandrino & Brown, P.A., serves clients from around the world. We are conveniently located in Orlando, Florida, and serve communities throughout central Florida, including Sanford, Lakeland, Daytona, Apopka, Clermont, Cocoa and Ocala, as well as Orange County, Lake County, Polk County, Seminole County, Volusia County, Brevard County, Marion County, and Osceola County. If you live near Kissimmee, Altamonte Springs, Winter Park, Lakeland, Winter Haven, or Davenport, please contact us to make an appointment at our office. For clients outside of Central FL, we can arrange a teleconference meeting.
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