Agency Contract in Egypt

Egyptian law on agency contracts is governed in part by the Law on agents (Law no. 120/1982), and in part by the Commercial Code (Law no. 17/1999, in force since 01.10.1999). While the Law on agents is limited to administrative prescriptions (registration, bookkeeping and so on), Articles 148 et seq. of the commercial code dictate the most important substantive conditions for the agency relationship.
Depending on the agency contract, a commercial agent permanently acquires on behalf of the other, said principal, the task of promoting the conclusion of trades or of concluding them himself and this towards the payment of a commission, coming from the turnover of the trades promoted or concluded directly.
A distinction is made between the agent for the promotion of trades ("Commission agent" or in Arabic "wakîl bi-l- umûlât") and the agent for the conclusion of trades ("Contract Agent" or in Arabic "wakîl al-‚ uqûd "). The natural person agent must have Egyptian citizenship. In the case, however, of the legal person, it must be wholly, or for the majority share, owned by Egyptian citizens and have its main office in Egypt.
The agent does not necessarily have to be independent, however he cannot be an employee of a state-owned company or one of its agencies or subsidiaries, nor can he be a public official. Furthermore, the agent cannot be a direct relative of a member of the legislative or executive power or of a senior public employee.
Both legal persons and natural persons who undertake the activity of agent must be registered in the register of agents or mediators, kept at the Ministry of Economy and Foreign Trade. If the principal foreign legal person invests the agent with the power of representation, the agency contract must be validated by the Egyptian Chamber of Commerce or other similar institution or, in cases of stipulation abroad, by the Egyptian consulate.

Requirements, commissions and obligations

Regarding the agency agreement, for Egyptian law the written form is a binding requirement. First of all, it is advisable to regulate aspects such as the area of ​​application, attaching the geographical map, the object of the contract, attaching the product description, and the exclusivity, attaching the list of customers.
It should be emphasized that, in the absence of contrary agreements, the agent always has an exclusive right, so the principal can only employ one agent in the same region or for the same branch of shops. The amount of the commission and the payment methods can be freely determined by the parties.
However, it should be noted that in Egypt the most usual forms of remuneration are either the one with the "collection" clause, which legitimizes the agent to assert the credits in the interest of the principal, or the " star del cred ”, with which the agent bears the risk of the successful outcome of the trade procured. In principle, however, the commission is due from the moment of payment of the price to the principal by the third party that the agent contacted.
Furthermore, the obligations of the agent must be well regulated, in particular with regard to the confidentiality of the principal's secret / confidential negotiation information, the prohibition of competition upon termination of the relationship (indemnity for the period of non-competition yes / no) and the specific regulation with regard to ascertaining the solvency of the customers procured, in addition to the specific regulation of the general duties of informing on market developments.
In addition, it is necessary to specify the obligation for the agent to observe the directives given to him, as well as his responsibility for damage to the goods that have been delivered to him by the principal.
Agency contracts can be concluded for a fixed or indefinite period. Egyptian law does not provide for a probationary period. In cases of open-ended contracts, neither the law on agents nor other special laws limit the right of the contractors to freely set a deadline for withdrawal. However, according to Egyptian law, at least an appropriate term (3-6 months) must be guaranteed or the withdrawal is only admissible in the presence of a guilty behavior of the agent. Fixed-term contracts can be terminated before the final term has elapsed only for a serious reason, or if there is a "serious and unacceptable behavior" on the part of the agent. Any contractual clause in derogation of this right is void.
With regard to jurisdiction, for disputes between the principal and the agent in charge of concluding transactions, Egyptian procedural law determines the jurisdiction of the judge of the place where the agent has his seat or residence, and this also regarding international competence. However, in the event of a lawsuit brought by the agent against the principal, the jurisdiction may be waived by the agreement of the parties. In the absence of an agreement between the parties, the Egyptian courts will always admit a lawsuit brought by an Egyptian agent.

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» EXTRA-JUDICIAL ASSISTANCE IN TRADING WITH HIGH PROFILE ARABA AND ITALIAN LANGUAGE LEGALS

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» WIDE RANGE OF SERVICES IN THE FIELD OF INTERNATIONAL PRIVATE LAW

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