Regulations on duration of agency in Vietnam

What is commercial agency?

Pursuant to the Commercial Law 2005, commercial agency means a commercial activity whereby the principal and the agent agree that the agent, in its own name, sells or purchases goods for the principal or provides services of the principal to customers for remuneration.

In particular, principals are traders that deliver goods to agents for sale or provide money to agents for purchase of goods, or traders that authorize the provision of services to service-providing agents.

Agents are traders that receive goods to act as sale agents or receive money to act as purchase agents or accepts the authorization to provide services.

Unless otherwise agreed, payments for goods, payment of service charges and payment of agency remunerations shall be made in installments after agents complete the purchase or sale of a specific quantity of goods or the provision of a specific volume of services.

Regulations on duration of agency in Vietnam (Internet image)

Forms of commercial agency in Vietnam

Pursuant to Article 166 of the Commercial Law 2005, the forms of commercial agency include:

- Off-take agency is a form of agency whereby the agent definitely sells or purchases a specific quantity of goods or provides a full service for the principal.

- Exclusive agency is a form of agency whereby a sole agent is authorized by the principal to sell or purchase one or more goods items or to provide one or more types of services within a given geographical area.

- General goods sale or purchase or service provision agency is a form of agency whereby an agent organizes a network of sub-agents to sell or purchase goods, or provide services for the principal.

The general agent represents the network of sub-agents. Sub-agents operate under the management and in the name of the general agent.

- Other forms of agency agreed upon by the parties.

Regulations on duration of agency in Vietnam

Pursuant to Article 177 of the Commercial Law 2005, regulations on duration of agency are as follows:

- Unless otherwise agreed, the duration of agency shall expire only after a reasonable period of time which must be at least 60 days after either party to the agency contract notifies the other party of the termination of such agency contract.

- Unless otherwise agreed, if the principal notifies the termination of the agency contract according to the provisions of Clause 1 of this Article, the agent shall have the right to request the principal to pay a compensation for the period of time during which it has acted as an agent for such principal.

The value of such compensation shall be an average one-month’s agency remuneration for each year the agent has acted as an agent for the principal. Where the duration of agency is less than one year, such compensation shall be equal to an average one-month’s agency remuneration during the agency term.

- Where an agency contract is terminated at the request of the agent, the agent shall not have the right to request the principal to pay compensation for the period of time during which it has acted as an agent for the principal.

Mai Thanh Loi

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