AGENTS AND AGENCIES

Types of agencies (brokers, buying and selling agents); finding an agent; offering an agency (convincing the agent, exclusive or non-exclusive agency, area to be covered, commission, settlement of accounts, support from the principal, delivery, duration of the contract, disagreements and disputes, special terms); asking for an agency (convincing the manufacturer, suggesting terms).

10.1

Types of agencies

Agents and agencies are appointed by firms to represent them. There is a wide range of activities concerning representation and although in this unit we will mainly be dealing with buying and selling agencies, it would be useful to look at other areas where companies act on behalf of their clients, as they will be referred to later.

10.1.1

Brokers

Brokers usually buy or sell goods for their principals (the firms they represent) and sometimes never handle the consignments themselves. There are various types of brokers, and the list below will give you an idea of the sort of broking facilities that exist.

Brokers/dealers on the Stock Exchange buy and sell shares for their clients, who cannot go on to the 'floor' of the Exchange and deal for themselves if they are not members. The client asks the broker/dealer to buy or sell shares for him, and the broker takes a commission on the purchase or sale.

Ship brokers arrange for ships to transport goods for their clients. The brokers operate mainly from the Baltic Exchange or one of its branches, and we will look at this in more detail in Unit 11 Transportation and shipping.

Insurance brokers arrange insurance cover with underwriters who pay compensation in the event of a loss. See Unit 12 Insurance.

The Commodity Markets. In these markets brokers buy and sell commodities, e.g. cocoa, tea, coffee, rubber, etc., on behalf of their clients.

The Metal Exchange, i.e. the market for buying and selling ores and metals in bulk, also employs brokers to deal on behalf of companies.

There are other Exchanges where companies use brokers to represent them, either because the company does not have membership of that Exchange, or they want to use the broker's specialized knowledge of the market.

Contact between buyers and brokers is done by phone, cable, fax, or telex, as prices in the markets tend to fluctuate quickly, even by the minute in the case of bullion and foreign currency.

10.1.2

Confirming houses

These agents often receive orders from abroad, place them, arrange for packing, shipment, insurance, and sometimes finance or purchase the goods themselves, then resell them to the client. They may act on a commission, but if buying on their own account will make a profit on the difference between the ex-works price and the resale price they quote the importer.

10.1.3

Export managers

If a firm does not have a branch in the country it is exporting to, they can appoint an export manager. He will deal

under his own name, but use the address of the company he represents. His job is primarily to develop the market for the exporter, and for his services he may charge a fee, or arrange for a profit-sharing scheme between himself and the exporter.

10.1.4

Factors

These agents can buy and sell in their own names, i.e. on their own account, receive payment, and send accounts to their principals. They often represent firms exporting fruit or vegetables.

Note: 'Factoring' is the process in which the firm buys the outstanding invoices of a manufacturer's customers, keeps the accounts, then obtains payment. 'Non-recourse factoring' involves the buying up of outstanding invoices and claiming the debts. If the buyer (the manufacturer's customer) goes bankrupt, the factor has no claim, whereas in 'recourse factoring', the factor will claim from the manufacturer if the customer cannot pay.

10.1.5

Manufacturer's agents

This agent represents a manufacturer and obtains goods, then resells them. The agent may work on a commission, i.e. buying the goods on consignment, or, if described as a merchant, he will buy the goods from the manufacturer on his own account, that is to sell them for his own profit. If he is a sole agent, he agrees only to sell his principal's products, and not those of a competitor, and the manufacturer would probably agree not to supply the sole agent's rivals in his country.

10.1.6

Buying agents

Buying agents, or buying houses, buy products on behalf of a principal and receive a commission. The agency is employed to get the best possible terms for their principal, and will try to find the most competitive rates in shipping and insurance for them. Buying houses often act on behalf of large stores.

The orders sent to buying agents are called indents and are of two types: open indents, where the agent chooses his/her supplier, and closed or specific indents, where the supplier is named by the principal.

10.2

Finding an agent

It is possible to find an agent through a number of sources: advertising; in Trade Journals; contacting government departments of trade in your own country or the country you wish to export to; consulting Chambers of Commerce, Consulates, Trade Associations, and banks. Letters to these organizations are routine, and the guide below gives you an indication of how these letters are laid out.

10.2.1

Opening

Tell the organization who you are.

We are a large manufacturing company specializing in...

We are one of the leading producers of...

You probably associate our name with the manufacture of chemicals/ textiles/business machines/heavy engineering...

10.2.2

Date: 2016-01-03; view: 960