Commercial Agency Agreement Template for Saudi Arabia

The Commercial Agency Agreement is a critical document for foreign companies seeking to establish a commercial presence in Saudi Arabia through local representation. This agreement type is specifically regulated under Saudi Arabian Commercial Agencies Law and must comply with Sharia law principles. It is typically used when a foreign company (principal) wishes to appoint a Saudi entity (agent) to represent their interests, distribute their products, or provide services in the Saudi market. The document must address mandatory requirements including agent registration with the Ministry of Commerce, territory definitions, commission structures, and termination rights. The agreement serves as both a commercial and regulatory document, establishing the business relationship while ensuring compliance with local laws regarding foreign business activities in Saudi Arabia.

1. Parties: Identification of Principal and Agent, including full legal names, commercial registration details, and addresses

2. Background: Context of the agreement, brief description of the parties' businesses, and their intentions to enter into an agency relationship

3. Definitions: Key terms used throughout the agreement, including Products, Territory, and Commercial Agency Law references

4. Appointment and Scope: Terms of agent appointment, territory definition, and whether the appointment is exclusive or non-exclusive

5. Registration Requirements: Obligations regarding registration with the Ministry of Commerce and other relevant authorities

6. Agent's Rights and Obligations: Detailed responsibilities including promotion, sales, customer service, and reporting requirements

7. Principal's Rights and Obligations: Support, training, product supply, and other obligations of the principal

8. Commission and Payment Terms: Commission structure, calculation method, payment terms, and currency specifications

9. Intellectual Property Rights: Usage rights for trademarks, trade names, and other IP in the territory

10. Confidentiality: Protection of confidential information and trade secrets

11. Term and Termination: Duration of agreement, renewal terms, and termination provisions compliant with Saudi law

12. Post-Termination Rights and Obligations: Compensation rights, inventory handling, and transitional arrangements

13. Governing Law and Dispute Resolution: Application of Saudi law and dispute resolution mechanisms

14. General Provisions: Standard clauses including notices, amendments, and entirety of agreement