• 2023.05.30
  • International Transaction

A case study of preparing an English-language distributorship agreement with an American company

Outline of the case

Our client A sells products related to Internet security, and an American company has proposed to our client that our client becomes their sales agent to sell their products in Japan. The agreement presented by the U.S. company was an Agent Agreement, which provided that if the U.S. company’s products were sold in Japan, our client A would receive an introduction fee a commission. Our client A believed the potential of the product, but felt that if the product was to be sold in Japan, it was necessary to establish a solid relationship with the company and to have a thorough understanding of the product’s contents. Therefore, our client A came to our firm for a consultation to ask us how he should respond to the proposed contract presented by the US.

Our Services

When we looked at the English contract shown to us by our client A, the title of the contract was a Distributor Agreement, but its content was an Agent Agreement, which was different from the distributor agreement that our client wanted. In the Agent Agreement, the parties to the sales agreement are the American company (seller) and the Japanese customer (buyer), and our client is not a party to the sales agreement. As a result, they were not obligated as sellers or buyers, but only received a performance fee paid at the stage when the contract was concluded, and the margin of the agent fee was small. Our client A, for its part, (1) wanted the contract relationship to be exclusive, (2) wanted the contract relationship to be long-term so that it could not be easily terminated, (3) wanted our client to be able to determine the sales price in Japan, and (4) wanted to obtain a higher margin than the American company was proposing, and. (5) wanted to establish a sales organization with an agent in Japan. Therefore, we modified the Agent Agreement presented by the U.S. and changed it to a Distributorship Agreement, and modified it to reflect the Japanese side’s requirements. When our client made a proposal to the U.S. company based on our modifications, the U.S. company agreed and said, “We would like to leave the Japanese market to A, so we would like you to make efforts to sell our products. If sales in the Japanese market are strong, we would like to grant them sales rights for all of Asia in the future.

Advantages of Our Firm

We have drafted, translated, and reviewed (legal checks) numerous Distributorship Agreements and Agent Agreements in English. There are many differences between English-language distributorship agreements and English-language agent agreements in terms of transaction structure, risk sharing, and profit sharing. Either contract is advantageous or disadvantageous to the Japanese company, and the choice of which contract to execute depends on the nature of the transaction. We recommend a legal check by an attorney to properly understand the structure of the transaction and to proceed with a safe transaction.

We offer various types of English service contracts

We draft, translate, and legally check various types of Distributorship Agreements and Agent Agreements in accordance with our clients’ wishes. There are various types of agreements, ranging from those that set forth the basic framework of a transaction to those that provide for individual sales and purchase arrangements. We are able to handle diverse types of agreements.

We propose contract clauses according to your requirements

Not all sales representative or agent agreements are the same, and the terms of the agreement must be modified to meet your company’s requirements. We understand the client’s requirements through interviews with the client and prepare a service agreement with the content the client desires. These clauses may include: agency or agent, exclusive or non-exclusive contract, whether or not a lower sales representative can be established, how margins are determined, how discount rates are calculated, minimum purchase guarantees, and statements regarding sales restrictions. The term of the contract, force majeure clause, governing law, jurisdiction, etc. may also be requested to be modified to meet the client’s wishes.

We prepare quotations and mandate agreements

In principle, we will prepare a written estimate and present the estimated amount in advance, except in cases where the attorney’s fee will be a small amount. If the client agrees to the estimate, the client is required to sign a power of attorney agreement. The amount of attorney’s fees is clear, so you can feel secure in your decision.

We protect your rights

It is not safe to say that a distributor/agent agreement is safe once it is created, but care must be taken to ensure that ongoing transactions proceed smoothly. In particular, since various claims from customers may arise, such as responses to claims from sales partners and returns of products, it is necessary to create a system to deal with these claims. Our firm has a great deal of experience in dealing with these claims, and we try to propose appropriate proposed provisions to prevent disputes.

We represent your interests in the event of disputes

Although it is important for a distributorship agreement to remain stable over a long period of time, each time the client is required to review the terms of the agreement, or in some cases, the client may be asked to terminate the distributorship agreement. Based on the interpretation of the contract, we analyze the client’s risk, propose a solution to the dispute, and represent the client in negotiation with the other party.

Legal fees for an English language distributorship agreement (example)

We check the contents of the English sales representative agreement proposed by the U.S.
company and modify the agreement to meet the Japanese company’s requirements.

The English contract presented by the client was not an English sales agency contract, but an agent contract. It is possible that the American company did not fully understand this point and presented a sample at random. We revised the contract presented by the U.S. company to the English-language distributorship agreement expected by the Japanese company.
・Lawyer’s fees: 220,000 yen (including tax)

We drafted an English language distributorship agreement.

Our client prepared an English language distributorship agreement with a Greek company in connection with the sale of a product to a Greek company. In this case, our client had prepared a first draft of the agreement and had prepared a Japanese translation through an administrative scrivener. However, we made significant revisions to the agreement because it contained many errors in both English and Japanese and was not well thought out in terms of content. In this case, the English contract is 4 pages long, but we also prepared a Japanese translation.
・Attorney’s fees: 220,000 yen (including tax)