Principal Agency Agreement Template for Saudi Arabia

The Principal Agency Agreement is a critical document for foreign companies seeking to establish or maintain a commercial presence in Saudi Arabia, where local commercial representation is often required by law. This agreement type is particularly important as it must comply with Saudi Arabia's Commercial Agency Law and its Implementing Regulations, while also adhering to Sharia law principles. The document establishes the framework for the commercial relationship, defining territorial rights, commission structures, performance expectations, and mutual obligations. It's commonly used when foreign manufacturers, suppliers, or service providers need local representation in Saudi Arabia, and includes specific provisions for protection of both parties' interests, compliance with local regulations, and clear operational guidelines. The agreement typically requires registration with relevant Saudi authorities and must address specific local law requirements while maintaining commercial practicality.

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

2. Background: Context of the agreement, relationship background, and general intent of the parties

3. Definitions: Key terms used throughout the agreement, including Territory, Products/Services, and specific commercial terms

4. Appointment and Scope: Express appointment of agent, exclusivity status, and detailed scope of authority

5. Territory: Geographic area where the agent is authorized to act

6. Duration and Renewal: Term of the agreement, conditions for renewal, and notice periods

7. Rights and Obligations of the Agent: Detailed responsibilities, performance standards, and compliance requirements

8. Rights and Obligations of the Principal: Support, training, and other obligations of the principal

9. Commission Structure: Payment terms, commission rates, calculation methods, and payment schedule

10. Intellectual Property Rights: Usage rights of trademarks, trade names, and other IP

11. Confidentiality: Protection of confidential information and trade secrets

12. Non-Competition: Restrictions on competing activities during and after the agreement

13. Termination: Grounds for termination, notice requirements, and consequences

14. Post-Termination Obligations: Obligations surviving termination, including inventory handling and documentation return

15. Governing Law and Jurisdiction: Application of Saudi law and dispute resolution mechanisms

16. General Provisions: Standard clauses including force majeure, notices, and amendments