Gil Sperling

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Distribution Agreements In Uae

April 9, 2021 by gilsperling

To what extent can a supplier limit the guarantees it provides to its distributors and to what extent can both parties limit guarantees for its downstream customers? Before signing trade agreements or opening operations in the United Arab Emirates, U.S. companies should conduct thorough investigations and due diligence. U.S. companies should obtain professional legal advice in structuring contractual documents. According to the agreement, the contract should include items such as performance measures for the local representative, the duration of the contract and the list of projects and other detailed issues under the contract. In practice, foreign suppliers enter into “incidental agreements” with the local sponsor, in addition to the statutes. These ancillary agreements are intended to ensure that the foreign supplier has full control of the limited liability land-based company. What laws and authorities govern the relationship between a supplier and its distributor, agent or other agents? Are there any industry self-regulation restrictions or other restrictions that can determine the distribution relationship? What are the restrictions on a supplier or distributor`s ability to promote and market the products they sell? Can a supplier pass on all or part of its advertising costs to its distributors or participate in its advertising costs? In practice, many unregistered distributors require damages in the event of termination, as if they were a registered representative. It is significant that some of the considerations of the UAE Courts judgments, when reviewing and assessing compensation in the event of termination of the unregistered agency/distribution agreement, may lead to the question of whether the courts are actually considering criteria similar to those of compensation to be paid in the event of termination of a registered agency. The term “agent” in most trade agency laws governs the traditional Western concept of a commercial agent who, on your behalf, subserns with third parties, but may include, in certain circumstances, distribution and franchise agreements. We have therefore used the term “agent” in this article to address common problems that can arise in both traditional agency relationships and distribution or franchise agreements. The effect of these provisions is that a foreign supplier, if wishing to import and market goods in the United Arab Emirates through a land-based company, may at no time exceed its ownership in the UAE-based company above 51 per cent of the local sponsor`s compulsory ownership by 49 per cent.

While this may be a subjective issue, agency agreements have long been the preferred route or mechanism for most foreign companies to develop in the Uae. It should be noted that agency agreements are promising for foreign companies that have enjoyed a good reputation and success abroad. These companies often have a long-standing reputation with their customers and should be capital intensive.

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