Sourcing Fee Agreement Template for the United Arab Emirates

A Sourcing Fee Agreement is a commercial contract that establishes the terms under which a sourcing agent or company provides procurement and supplier identification services to a client in the United Arab Emirates. This agreement governs the relationship between parties engaged in finding, evaluating, and securing suppliers for goods or services, setting out clear expectations for compensation, performance standards, and commercial obligations under UAE law.

When do you need this document?

You need a Sourcing Fee Agreement when engaging external expertise to identify suppliers, negotiate procurement deals, or access specialized market knowledge in the UAE or international markets. This document is particularly crucial for businesses entering new markets where local supplier relationships are essential, or when seeking cost-effective alternatives to existing supply chains. Companies often require this agreement when establishing joint ventures, expanding product lines, or when internal procurement teams lack specific industry expertise. The agreement becomes vital in high-value transactions where success fees are substantial, ensuring all parties understand their obligations and compensation structures.

Key legal considerations

Your Sourcing Fee Agreement must clearly define the scope of services, compensation structure, and performance metrics to avoid disputes under UAE commercial law. Fee arrangements should specify whether compensation is success-based, retainer-based, or a combination, with clear triggers for payment obligations. The agreement should address confidentiality requirements, as sourcing agents often access sensitive commercial information about suppliers and pricing. Territory and exclusivity clauses require careful drafting to ensure they don't conflict with UAE Commercial Agency Law provisions. You must also consider intellectual property rights over supplier databases, market research, and procurement strategies developed during the engagement.

Legal requirements in United Arab Emirates

Under UAE Civil Code, your Sourcing Fee Agreement must contain essential elements including clear identification of parties, specific service obligations, and lawful consideration. The UAE Commercial Transactions Law governs commercial aspects of the relationship, requiring compliance with business registration and licensing requirements for both parties. If the sourcing arrangement could be interpreted as a commercial agency relationship, UAE Commercial Agency Law may apply, potentially requiring local UAE representation or specific licensing. VAT considerations under UAE Federal Decree-Law No. 8 of 2017 must be addressed, particularly for fee calculations and invoicing procedures. Foreign investment restrictions may apply depending on the parties' ownership structures and the nature of sourcing activities. The agreement should specify governing law and jurisdiction clauses, with UAE courts generally having jurisdiction over commercial disputes involving UAE-based parties.