Legal Characterization of Agency Export Agreements

An equipment agency export agreement is,in essence,categorized asCommission ContractwithCommission Contractof the composite legal relationship.Pursuant to Article 919 of the Civil Code,when the entrusted party (the agency company) handles export affairs in its own name for the principal (the equipment manufacturer),the following legal characteristics must be given special attention:

• Theagencycompanyhasindependentcustomsdeclarationentitystatus.
• Allforeignexchangereceiptsandpaymentsmustbeconductedthroughthecorrespondentaccount.
• Specialprovisionsonintellectualpropertyownershiparerequired

Key Design Points for Core Terms of the Agreement

After the implementation of the new edition of the Incoterms in 2025,The agreement should focus on the following clause provisions:

• PricingClause
  • DifferencesinApplicableScenariosBetweenDAPandDPUTerms
  • Exchangeratefluctuationrisksharingmechanism
• Quality Assurance
  • CECertificationTransitionResponsibilityAllocation
  • Obligationtoestablishanafter-salesservicesystem
• Dispute Resolution
  • RecommendationsonSelectingCross-BorderArbitrationInstitutions
  • SpecialProvisionsonEvidencePreservation

Practical Guide to Typical Risk Prevention

A construction machinery company suffered a loss of $3.4 million in 2024 due to loopholes in its agreements,exposing three major risk prevention and control blind spots:

• Third-partyclaimtransfer:Clearlystipulatetheproportionofliabilitytobebornebyeachpartywhenthebuyermakesaclaim.
• Technicalparametererror:Establishadual-verificationmechanismanderror-tolerancestandards
• LogisticsNodeControl:RefinetheoperationalproceduresforPre-ShipmentInspection(PSI)

Analysis of a Model Special Equipment Export Agreement

Taking CNC machine tool exports as an example,the agreement needs to be supplementedTechnology Control Clauses:

• ECCNCodeConfirmationProcess
• End-UserCertificate(EUC)VerificationProcedure
• Re-exportrestrictionclause

Common Legal Misconceptions Alert

According to the 2024 White Paper on Commercial Trials issued by the Supreme People’s Court,disputes over equipment exports mainly stem from the following factors:

• Confusingagencywithasales-purchaserelationship(37%)
• IncorrectapplicationofINCOTERMSversion(29%)
• Neglectingupdatestotechnicaltrademeasures(18%)