Termination of contracts

Termination clauses in international contracts, specially agency and distribution contracts, usually involve rights under local legislation and it is best that a contract is revised by a local lawyer before signature, rather than after a relationship has ended and a compensation case could appeared. Termination laws differ from country to country. For example in the European Union the agent whose contract is terminated is entitled to the following:

  • full payment for any deal resulting from its work, even if concluded after the end of the agency contract;
  • a lump sum up to one´s year average commission:
  • compensation (where appropriate) for damages to the agent´s commercial reputation caused by unwarranted termination.

Some countries regard agents as basically employees of the client, while others see agents as self-contained and independent businesses. It is essential to ascertain the legal position of agency agreements in each country in which a firm is considering doing business. For example, laws in Saudi Arabia are extremely strong in protecting agents. See agent; distributor.

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