A commercial agent may be more familiar with the local market and may be able to facilitate certain transactions. A company should choose its agent carefully; terminating or changing agents can be a difficult process.
The term” Commercial agent” describes a variety of roles and responsibilities some of commercial agents sell goods or services despite other commercial agents buy or sell goods directly from the manufacture and resell them to others for commission. All these types of commercial agencies are covered under commercial agency law in Saudi Arabia.
In addition , when a foreign company selects the commercial agent which can be either individual or a company . Moreover, the Saudi law only permits citizens of Saudi Arabia or wholly-owned Saudi companies too operated as commercial agents.
The commercial agent also must be licensed when foreign company want to collaborate with commercial agent should enter into an agency agreement with the Saudi agent and this agreement must be approved by the ministry of commerce . Furthermore, The Ministry provides a model agency agreement, but, most western companies find it necessary to amend and augment the model agreement. A company can negotiate its own agreement, but the Ministry is more likely to approve one that resembles the model agreement.
Any termination or change of a commercial agent must be fair to the old agent. Under some circumstances, the failure to renew an agent may be considered a form of termination. Wrongfully terminating an agent may expose a company to liability and may make it more difficult to obtain government approval of a replacement agency agreement. As a result, the termination section of any agency agreement must be carefully spelled out and should generally provide for fair treatment of all parties upon termination.