Be prepared!

I recently read that prenuptial agreements are on the up. There has been as much as a tenfold increase in agreements, in the last five years signed by couples to sort out who gets what if the relationship goes wrong.

We all know that not every relationship end in the fairytale fashion of ‘they lived happily ever after’ and therefore catering for the sometimes inevitable beforehand, obviously seems a good idea to an increasing number of people.

What has that got to do with international trade you might wonder?

When striking a relationship with a potential distributor or agent, you experience similar patterns of mutual affection. Everybody is positive and fired up about the new relationship and both parties are in heaven about ‘doing the business’ and are looking forward to the fruits of their labour. But like any relationship the effort to bond and built a rapport is vital for the continuous success and longevity of that heavenly feeling. But more often or not I hear exporters raising their concerns – “my agent is not performing”, ” my distributor has not ordered any new stock” – or they find out that the other party’s priorities lie elsewhere, perhaps they’re even working for their partner’s fiercest competitor in the market. And of course the comment is then – “I want out!”

Is this where you wish you would have invested in a proper legal document – like a prenup – where all parties know what would happen if the happily-ever-after relationship does not materialise? Where do you stand in legal terms? Severance from an agent is not always that simple.

I recommend strongly a ‘prenup’ for the exporters, in the guise of an agency or distributor agreement. This is not just about the unhappy relationship with your agent or your distributor – it’s also about the wider impact a fruitless relationship has on your company, in particular your client base!

I salute all the experienced exporters that seek legal advice when drafting relevant documents with guidance from the legal profession. And as one exporter just told me as I am writing this blog ‘contractual obligations are there even if you don’t have an agreement – it’s a minefield!’

Prenups might have been around for 2000 years, but wouldn’t it be good to see a similar tenfold increase in agency and distributor agreements too, to avoid the repercussions when a business relationship goes wrong?

I will address the difference between an agent and distributor in a future blog.

It would be great to hear your views/comments on this. What lessons have you learnt?

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