KINGDOM OF SAUDI ARABIA
MINISTRY OF COMMERCE
INTERNAL COMMERCE CONTROL
CONTRACT OF AGENCY OR DISTRIBUTORSHIP
On this day _____________/____/ 14 ____(H), corresponding to
this agreement has been made by and between:
(1) _________________________________________________, whose business address is
C.R. No. ________________________dated ______________________, city of :
represented herein by _________________________________________, (hereinafter referred
to as the "First Party/Principal");
(2)The Agent/Distributor ____________________________________________,
whose business address is
in____________________________________________________________________, C.R. No.
dated __________________________________ city of:_______________________
represented by __________________________________________
(hereinafter referred to as the Second Party/Agent").
WHEREAS, both parties desire to enter into an agency of distributorship
arrangement to serve their mutual interests and to specify the rights and obligations of
each party in such arrangement; and
WHEREAS, the Second Party (Saudi) desires that such relationshjp
conform to the requirements of regulations with regard to foreign trade (import and
export), specifically the Commercial Agencies Regulations and Amendments thereof in the
Kingdom of Saudi Arabia, which regulations require a direct relationship between the
business agent or distributor of products and the originator company abroad. Non-saudis
are prohibited from engaging in import and export business and commercial agencies in the
Kingdom of Saudi Arabia.
Both parties hereby agree as follows:
Article ( 1 ) The above recitals shall be considered an integral
part of this contract.
Article ( 2 ) Both parties agree that the Second Party, as Agent or
Distributor ("Agent") for the First Party shall negotiate and conclude
any agreements concerning the products or services subject to this distibutorship
agreement on behalf of ______________________ and in the name of
Article ( 3 ) The scope of this agency contract covers the products
and services provided by the First Party as hereunder specified.
The Products included in this agency contract are:
Article ( 4 ) The geographic area covered by this contract shall be
________________(specify whether throughout the Kingdom or for a certain region.
Article ( 5 ) The term of this contract shall be ________________
effective as from __________________ renewable automatically for another period unless
either party gives at least three months prior written notice of his intention to
terminate the contract.
Article ( 6 ) Because the Second Party is obligated to guarantee
the quality of the products and materials which form the subject of this contract and to
provide necessary maintenance and spare parts at reasonable prices when required by
consumers, the First Party shall also be obligated to the Agent for the same obligations
on such dates and shall provide such spare parts in such amount as may be specified by the
Agent. In addition, the First Party shall provide to the Second Party at reasonable prices
such spare parts and necessary maintenance through the date one year following the expiry
date of this contract or from the time of appointing another agent.
Article ( 7 ) The Second Party is obligated under the law of
importing country to provide under this Contract only products and materials that are
compatible with the approved standard specifications in the importing country. The First
Party shall guarantee the quality of these products and materials and ensure that they
conform to approved standard specifications in the importing country; the Agent shall not
be obligated to receive, or responsible for distribution of, any quantities received from
the First Party that are contrary to such required standard specifications.
Article ( 8 ) Both parties shall execute this contract in
accordance and acknowledged business practices and good faith. Such obligation shall
extend to include all activities rendered as part of the contract requirements under
generally accepted business practices.
Article ( 9 ) The Second Party shall undertake to:
(a) Provide the premises required for the Agent to run his business in
the Kingdom with his own staff, exercise all reasonable care and diligence, and be
entitled to make use of the services and technical expertise of the First Party as and
(b) Perform all works necessary to execute contracts locally for
promoting and marketing the products, make available the suitable storage areas, open new
distribution centers as may be necessary and provide local services within the area
covered by the Contract. The Second Party shall, in the performance of this Contract, be
entitled to use the First Party's trademark but without any additions or modifications. He
shall also exert his best efforts to make such trademark known throughout the area.
Article ( 10 ) The First Party shall undertake to :
(a) Pay the Second Party a commission in the amount of
_____________________________ of the value of the items sold within the Contract area even
if the sales were made directly to a third party by the First Party. Schedule of Payments
shall be as follows: ___________________
(b) Execute the Contract with diligence whether as to observation of
good quality products and materials which form the subject of the Contract, or to insure
safe and good delivery to the Second Party, or to fulfill obligations regarding quantities
and dates specified in the Second Party's orders.
(c) Bear responsibility for the faults of himself and his employees,
when such fault results in damage to the Second Party.
Expiry, Cancellation and Compensation
Article (11) This contract shall be terminated if performance by
either party is rendered impossible, or, upon the death or the loss of competency, or
bankruptcy of either party. This contract may also be terminated by revocation upon a
substantial failure in execution by the other party.
Article (12) The Agent shall be entitled to compensation for
damages which may arise out of the Principal's inability to meet his commitments,
according to the Contract, or to business customs.
Article (13) If the Principal refuses to renew or continue work
under this Contract, the terminated Agent shall be entitled to reasonable compensation for
his activities that may have resulted in the apparent success in the business of the
terminated Agent. Specifically, the terminated Agent shall be entitled to compensation for
his promotional activities and efforts at client relations that result in goodwill that
may accrue to the new Agent.
Article (14) The Principal may claim compensation from the Agent
from damages caused as a result of the Agent's abandoning his Agency prior to the expiry
of this contract or as a result of any breach of contract by the Agent.
Article (15) Should this contract be improperly terminated or
revoked, as a result of which either party sustains damages, the party improperly
terminating the contract shall be obliged to compensate the other party for the damages
such party sustained, taking into account the extent of efforts made and material and
non-material capabilities provided to serve the Agency prior to such improper termination.
Article (16) Disputes arising between the parties hereto as a
result of the performances under this Contract shall be settled amicably. Should this not
be possible, the matter shall be referred to the Committee for Settlement of Commercial
Disputes in the Kingdom of Saudi Arabia or to a local arbitration committee in accordance
with the regulations for arbitration. In case of a dispute between the Principal and
Agent, a new Agency Contract may be granted to a new Agent within the Agency area for the
same products or services only after the authority considering the dispute shall have made
a final award or decision.
Article (17) This Contract shall be governed by the provisions of
regulations prevailing in the Kingdom of Saudi Arabia, specifically the Commercial Court
Regulation, Commercial Agencies Regulations and amendments and implementing procedures
thereof, and the Arbitration Regulations and the relevant implementing procedures.
Article (18) This Contract has been executed in three copies, with
each party receiving one copy. The Second party shall present a certified copy to complete
the Contract registration in the Commercial Agencies and Distributors Register with the
Ministry of Commerce of the Kingdom of Saudi Arabia.
First Party (Principal)
Second Party (Agent)