What exactly is the legal nature of the agreement?

According to Article 919 of the Civil Code and international trade practices,an export agency agreement is essentially classified asEntrustment contract relationship。The agent (trustee) handles export affairs in the name of the principal,and its legal characteristics are as follows:

• Therightsandobligationsarisingfromtheagencyactshalldirectlybelongtotheprincipal.
• Theagentcollectsservicecommissionsratherthanearningprofitsfromproductpricedifferences.
• Theclientretainsownershipofthegoodsanddecision-makingauthorityovertransactions.

What is the essential difference between an exclusive agent and a non-exclusive agent?

Special attention should be paid to the type of agency in determining the nature of the agreement:

• ExclusiveagencyExclusive:
  • Theclientshallnotoperateindependentlyorentrustathirdpartywithintheagreedarea/period.
  • Theagentmustmeettheminimumperformancetargets(commonlyseeninelectromechanical).Tradedisputesettlementmechanisms
• Non-exclusive agencyGreater emphasis on flexibility:
  • Theentrustingpartyreservestherighttooperateindependently(acommonmodelforsmallandmedium-sizedenterprises).
  • Thereisnoregionalprotectionclausefortheagent(suitableforthefast-movingconsumergoodsindustry).

How is the risk allocation defined in the agency agreement?

According to the latest edition of the Incoterms? rules in 2025,the risk allocation needs to focus on three dimensions:

• Riskofgoods:Thedemarcationpointisusuallythedeliverytothecarrier(refertoFCAterms).
• Commercialrisks：Lossescausedbythebuyer’sbreachofcontractshallbebornebytheclient.
• Operationalrisks:Thepartyatfaultshallberesponsiblefordocumentationerrors,customsclearancedelays,etc.

Practical Case: A chemical company experienced a delay in shipment due to the agent’s omission in reporting hazardous chemical labels.Ultimately,based on Clause 7.3 "Document Review Obligations" of the agreement,the agent was held liable for 80% of the penalty.

What legal pitfalls should the client pay special attention to?

According to the international trade arbitration cases from 2023 to 2025,common cognitive biases include:

• Mistakenlyregardedtheagentasthetransactionparty(actuallyanintermediaryserviceprovider).
• ConfusionResponsibilityforPaymentCollection(Theentrustingpartyshallalwaysbetheobligeeofthereceivables.)
• OverlookingOwnershipofIntellectualPropertyRightsTerms(ParticularlyConcerningODMProjects)

Eight Essential Elements to Clearly Define in an Agency Agreement

Based on twenty years of practical experience,it is recommended to focus on the following key agreements:

• AgencyAreaandTerm(RecommendedSettings)MarketDevelopmentBettingClauseTradedisputesettlementmechanisms
• CommissionCalculationMethod(TieredCommissionisMoreMotivational)
• Disputeresolutionmechanism(recommendedtostipulatetheSingaporeInternationalArbitrationCentre)
• ComplianceCommitment(mustincludethelatestESGandcarbontariffclauses)
• CustomerOwnershipRules(RecommendedSettingsCustomerprotectionperiodTradedisputesettlementmechanisms
• Exchangeratefluctuationhandlingsolution(itisrecommendedtoadoptadynamicpricingmechanismin2025)
• ScopeofForceMajeure(CybersecurityIncidentsMustBeSpecificallyIncluded)
• TerminationConditionsoftheAgreement(RecommendedSettingsTransitionalprovisionsTradedisputesettlementmechanisms

Special Note: The "Regulations on the Management of Cross-Border Data Flows" that took effect in 2025 require that agency agreements must include the following provisions:Data Sovereignty ClauseIt is recommended that the client conduct a legal compliance review in advance.