Entering into a sales agency agreement with an entity which has sales experience or relationships in a particular industry can often be a productive mechanism for a trade mark owner to expand its brand and to meet customers in a foreign country. When drafting an agency agreement, trade mark owners typically insist on a provision stipulating that the laws of a specific jurisdiction will govern in the event of a dispute under the agreement.
The choice of law provision is carefully selected by the trade mark owner to provide for a governing law that is friendly to the trade mark owner and to provide a forum which is geographically convenient if a dispute were to arise.
However, simply because a sales agent contractually agrees to submit to the laws of a particular jurisdiction, certain laws which may be undesirable to the trade mark owner may nonetheless apply. For example, the laws of some countries provide for certain rights for a party upon termination and expiration of an agreement, which may include some sort of post-termination payment from the trade mark owner to the sales agent.
Often, choice of law provisions in a contract cannot remove the trade mark owner from certain post-termination payment obligations that may arise under the local laws of the country in which rights are granted pursuant to a sales agency agreement. Similarly, local law may render contractual language that seeks to circumvent post-termination payments unenforceable.
It is, therefore, recommended that trade mark owners consult with counsel prior to entering into a sales agency agreement in order to ascertain whether a sales agency agreement is the optimal relationship for the trade mark owner to effect its desired goals. Counsel for trade mark owners would likewise be wise to inquire into not only the relevant law in the country selected in the choice of law provision but also the relevant law in the country in which the sales agent will operate pursuant to the terms of the contractual relationship.
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| Karen Artz Ash and Bret J Danow |
Katten Muchin Rosenman LLP
575 Madison Avenue
New York
New York 10022-2585
United States
Tel: +1 212 940 8554
Fax: +1 212 940 8671
karen.ash@kattenlaw.com
www.kattenlaw.com
