APPOINTING AN AGENT/ SALES REPRESENTATIVE FOR THE U.S. (OR PART OF IT) John R.F. Baer Greensfelder, Hemker & Gale, P.C. Chicago, Illinois USA

Entering the U.S. Market Appointing an agent or sales representative any be the easiest way to enter the U.S. market European companies often do not do It right way

EU Commercial Agency Laws Very different from U.S. laws in many ways Cover agents who can bind a principal as well as those who cannot bind Termination compensation (indemnity) These laws often are a shock to many American companies

U.S. Sales Representative Laws 35 States and Puerto Rico Generally apply to principals who sell products at wholesale for resale and use independent sales representatives to solicit orders and compensate them on a commission basis Some cover solicitation for services, and some cover employees paid on a commission basis

Other Elements of the Laws Contract in writing and some require a signed receipt Payment of commissions during term and on termination Two require “good” or “just” cause to terminate Critical: payment of commissions on termination must be timely. Failure could result in damages of two or three times the commissions due, plus attorney’s fees

The Common Law The common law also affects sales representative contracts Where contract is silent on post-termination commissions, the “procuring cause doctrine” may afford a representative compensation

Drafting the Agreement Basic provisions Critical: Payment of commissions on termination must be covered Be careful to not make it a franchise

Organizing Contract Termination Terminate the right way – follow the contract terms Pay commissions due at time of termination promptly as required by the law Pay commissions that become due after termination promptly as required by the law